RBI Monetary Policy Announcement: The Reserve Bank of India’s (RBI) has kept the Benchmark interest rate unchanged at 6.50%. The RBI has stayed on hold for the past 18 months and the meeting that just ended is the 50th meeting of the RBI Monetary Policy Committee since its inception in September 2016. The detailed assessment of the macroeconomic conditions helped the RBI to decide on the current rate stance. According to RBI Governor also said the MPC remains focussed on withdrawal of accommodation to ensure inflation ultimately aligns with the RBI target.
The next RBI MPC meeting is scheduled on October 7-9. The MPC has kept the repo rate unchanged in the previous eight policy reviews. With today’s decision, the RBI has kept rates unchanged for the ninth consecutive time.
On August 07, the Bank Nifty rose 370.70 points or 0.75% to end the session at 50,119 ending above the key psychological level of 50,000. In the last five days, the sectoral index has fallen 3.36%. However, in the last six months, the index has risen more than 11%, compared to the benchmark index – Nifty 50 – which rose 11.88% in the same period.
After its April 2024 meeting, the Reserve Bank of India’s Monetary Policy Committee unanimously decided to keep the key interest rates unchanged at 6.50 per cent. The policy stance was also maintained at ‘withdrawal of accommodation’, Shaktikanta Das had said. The RBi governor had said that the GDP growth forecast for FY25 was at 7 per cent. The quarterly projections are – Q1 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7 per cent and Q4 at 7 per cent.
The previous RBI MPC meeting was held between June 5-7. The RBI Governor, after the June meeting, had announced that the MPC had decided to keep the benchmark repo rate unchanged at 6.5 per cent for the eight consecutive time by a 4:2 majority. It also decided to continue with its stance of ‘withdrawal of accommodation’. RBI raised its GDP growth forecast for FY25 to 7.2 per cent from 7 per cent earlier. The central bank retained the FY25 inflation forecast at 4.5 per cent.
The Centre determines the inflation target in consultation with the RBI, in terms of the Consumer Price Index (CPI) once in five years. In 2016, the Centre had set the CPI inflation target of 4 per cent till March 2021 (with an upper tolerance limit of 6 per cent and a lower tolerance limit of 2 per cent). This target was retained and will now be the goal till March 2026.
April 3-5, 2024
June 5-7, 2024
August 6-8, 2024
October 7-9, 2024
December 4-6, 2024
February 5-7, 2025
The last hike in the repo rate was taken by the RBI in February 2023. The repo rate is the interest rate at which the RBI lends money to commercial banks, which has a direct impact on big-ticket loans like home loans. When inflation rises, central banks across the world respond by increasing the repo rate, which leads to tightening of borrowing conditions for commercial banks. This results in a decrease in the money supply in the economy, ultimately helping to curb inflation.
The MPC or Monetary Policy Committee of RBI determines the policy repo rate required to achieve the inflation target. It also keeps a watch on the liquidity condition and overall state of the economy. This is the monetary policy committee’s third meeting for the financial year 2024-25, which started on August 6. The body was constituted in 2016 and is required to meet at least four times a year.
The panel headed by RBI Governor Shaktikanta Das has three external members. Other members of MPC are Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Rajiv Ranjan, and Michael Debabrata Patra. Every member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
It is worth noting that Shaktikanta Das’ term as the RBI Governor is set to end in December this year.
The Monetary Policy Committee meeting headed by RBI Governor Shaktikanta Das ends today and the MPC will announce its decision on repo rate. The RBI governor will deliver his monetary policy statement at 10:00 am and this can be watched on the official YouTube channel of RBI.
Per economists, RBI MPC is expected to continue the pause stance 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.
With the RBI MPC meeting ending today and Governor Shaktikanta Das all set to announce the decision of the policy committee, we, at FinancialExpress.com, are all ready and awaiting the announcement and are continuously bringing the updates on the repo rate, factors that may or may not have affected the deliberations at the 3-days meetings, state of Indian economy, and much more, through this live blog.
Stay tuned.