India’s central bank-The Reserve Bank Of India will begin its three-day Monetary Policy Committee (MPC) meeting today, which will run from October 7 to October 9. The policy decision is expected on October 9.
This meeting follows the U.S. Federal Reserve’s September 18 decision to cut interest rates by 50 basis points, after holding rates steady for eight consecutive meetings.
About RBI’s MPC Meeting
Led by RBI Governor Shaktikanta Das, the MPC is expected to assess several key factors, including inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation, particularly in food and fuel prices, remains a significant concern, having surged earlier this year.
According to data from the Ministry of Statistics & Programme Implementation, while the All India Consumer Price Inflation (CPI) for August stood at 3.65 percent—within the RBI’s target band—food inflation remains elevated at 5.65 percent, surpassing the RBI’s medium-term target of 4 percent.
But despite persistent inflationary pressures, the RBI has opted to hold the repo rate steady, prioritizing economic recovery following the pandemic.
However, there are growing concerns that external factors, such as rising global crude oil prices due to tensions in West Asia, may push the central bank to reassess its current stance.
Earlier this month, the central government appointed three new external members to the MPC. The committee now includes Professor Ram Singh, Director at Delhi School of Economics; Saugata Bhattacharya, an economist; and Dr. Nagesh Kumar, Director and Chief Executive of the Institute for Studies in Industrial Development.
Notably, the newly reconstituted MPC comprises three members from the RBI and three external members appointed by the central government. This committee is chaired by the Governor of the Reserve Bank of India, with the Deputy Governor overseeing monetary policy and another RBI official serving as ex officio members.
Meanwhile market participants and analysts are closely watching this meeting for any forward guidance on future rate actions. While many believe the central bank will maintain its wait-and-watch approach, there is some speculation that a rate hike could be on the table.
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(With Inputs From ANI)
