RBI’s monetary policy annoucement expected today

Today’s monetary policy announcement by the RBI is expected to include another repo rate pause.

December 8, New Delhi, India: Participants in the Indian financial markets will be closely watching for new signals regarding the central bank’s policy stance and announcement, which is expected at 10 am today, Friday. The Reserve Bank of India (RBI). The monetary policy committee will probably keep things as they are and not change. The RBI’s bi-monthly monetary policy committee (MPC) meeting got underway on Wednesday and will last for three days. During a financial year, the RBI normally holds six bimonthly meetings where it discusses a range of macroeconomic indicators, interest rates, the money supply, and the outlook for inflation. At its October review meeting, the monetary policy committee unanimously decided to maintain the current state of affairs by leaving the policy repo rate at 6.5% for the fourth time in a row. It has maintained the repo rate at 6.5% for the last four meetings. The interest rate at which the RBI lends money to other banks is known as the repo rate. RBI Governor Shaktikanta Das expressed concern during the policy statement deliberations in October, citing high inflation as a significant threat to macroeconomic stability and sustainable growth. Das reaffirmed the monetary policy committee’s commitment to keeping headline inflation in India at 4%. The central bank may have decided to pause the key interest rate due to a relative decrease in inflation, assuming that inflation does not continue to decline after the most recent spike. Many nations, even those with developed economies, have been concerned about inflation. With the exception of the most recent pauses, the RBI has increased the repo rate to 6.5% from May 2022 by a total of 250 basis points in an effort to combat inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. Retail inflation in India continued to ease through October, supported by a relative decline in some of the sub-indexes. The consumer price index (CPI) for October dropped from 5.02 percent in September to a four-month low of 4.87 percent.
While retail inflation in India is above the ideal 4 percent scenario, it is still within the RBI’s comfortable range of 2 to 6 percent.