RBI Monetary Policy October 2023 Highlights: RBI maintains status quo, keeps repo rate unchanged at 6.5%

The Monetary Policy Committee (MPC) is composed of three independent members and three members who are part of the RBI. The external members on the committee include Shashanka Bhide, Ashima Goyal, and Jayanth R Varma. Apart from Governor Shaktikanta Das, the MPC also includes two RBI officials – Rajiv Ranjan, who serves as the Executive Director, and Michael Debabrata Patra, who is the Deputy Governor of RBI.

“With sticky retail inflation (6.83 per cent in August 2023, 7.44 per cent in July 2023- trending downwards but still breaching the MPC’s threshold of 6 per cent) and the US Fed’s persisting hawkish stance, the RBI is likely to keep the Repo Rate (6.5 per cent since February 8, 2023) unchanged for the 4th successive time. Complex inflation management is necessary in these challenging times- times of globally synchronized slowdown, heightened geo-political tensions, oil prices rising to $93 per barrel, surging debt levels and growing economic fragmentation- reminiscent of the Chinese curse “may you live in interesting times!”

– Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings

“Global and domestic risks have increased from the August policy. Rising crude oil prices and the dollar are having an impact on the depreciating INR. With major developed market central banks seem to be setting up for a long pause at elevated policy rates, the Reserve Bank of India (RBI) has very little space to sound dovish. The RBI will maintain policy rate at 6.5 per cent while aiming to keep liquidity tight.”

– Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities

“While the central bank is expected to hold on to the rates, the sticky inflation level remains a challenge given the fresh upsurge in global crude oil prices. It will be interesting to observe the RBI Governor's tone during his address, especially after the US Fed chairman last month clearly outlined his intent to raise the rates further despite keeping policy rates unchanged. The RBI would also have to evaluate its strategy considering the fact that an increase of rates in the US and no change in India will lead to money flowing from India, creating issues both on forex reserves as well the currency front.”

In December 2022, the MPC increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent.

In the last quarter of FY23, on February 8, the RBI increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.50 per cent.

The Monetary Policy Committee (MPC) had met in April before that to assess the macroeconomic situation and decided unanimously to keep the policy repo rate unchanged at 6.50 per cent.

Before August, the MPC meeting was held on June 6-8 and the Central Bank had decided unanimously to keep the policy repo rate unchanged at 6.50 per cent. The MPC also decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

The last MPC meeting was held on August 8-10 and the Central Bank had decided to keep the key policy repo rate unchanged at 6.5 percent, maintaining the status quo for the third time in a row. The MPC voted in 5:1 majority to maintain the ‘withdrawal of accommodation’ stance to ensure that inflation progressively aligns with the target, while supporting growth, Shaktikanta Das had said.

The Monetary Policy Committee meeting headed by RBI Governor Shaktikanta Das ends today and the MPC will announce its decision on repo rate today. RBI Governor Shaktikanta Das will deliver his monetary policy statement at 10:00 am. This can be watched on the official YouTube channel of RBI.

RBI MPC is expected to maintain a hawkish pause and keep the repo rate unchanged at 6.5 per cent. The RBI has raised the repo rate by 250 basis points (bps) since May 2022.