RBI Monetary Policy: With conflicting expectations, RBI Governor Shaktikanta Das is scheduled to reveal the MPC’s policy decision on October 9 at the start of the central bank’s monetary policy committee meeting. The central bank has maintained the 6.50 percent repo rate at its nine consecutive meetings. The MPC decision is anticipated to be announced by RBI Governor Shaktikanta Das on October 9 at 10:00 a.m., with a news conference scheduled at noon.(HT) Today, October 7, marks the start of the Reserve Bank of India’s (RBI) three-day monetary policy committee (MPC) meeting, which is scheduled to end on Wednesday, October 9.
Notably, in an effort to balance inflation and economic growth, the central bank has maintained the repo rate at 6.50 percent for the last nine sessions in a row. This time, there are differing expectations, with many watching for clues that might point to a change in the RBI’s position. The six-member RBI MPC met for the first time this week after half of its members were replaced last week.
When and Where to Watch the October 9 MPC Announcement
On October 9, RBI Governor Shaktikanta Das is scheduled to make the announcement on the MPC decision at 10:00 a.m., with a press conference scheduled for 12:00 p.m. The panel is anticipated to consider variables like food and fuel inflation, global economic risks (such as rising crude oil prices and tensions in the Middle East), and India’s potential for economic growth. Observers believe the RBI may be forced to reevaluate its current position due to inflationary concerns and worldwide uncertainties in particular. Analysts and market players are keeping a close eye on this meeting in case any forward guidance regarding potential rate movements is provided. Although many people think the RBI will stick to its wait-and-watch strategy, a surprise rate increase is not completely out of the question.
Expectations of Economist:
Only in December, according to nine of ten economists surveyed by Mint, could the RBI MPC implement a 25 basis point (bps) rate drop. It was widely expected that the panel would likely maintain the benchmark repo rate at 6.5% for the tenth consecutive meeting, which is scheduled for October 7–9. Merely 50% of the economists surveyed by Mint anticipate that the MPC will stick to its policy of “withdrawal of accommodation,” while the other 50% anticipate an upgrade to “neutral” for the first time in the cycle of rate hikes that has lasted for the past two years.
“We do not expect any change in the repo rate or stance by MPC. The base effect is to blame for the current low inflation, and September and October will see inflation above 5%. Additionally, core inflation is gradually rising. Furthermore, there is ambiguity and the recent Iran-Israel controversy could get worse. The status quo is therefore the most likely choice, even for new participants. The Chief Economist at Bank of Baroda, Madan Sabnavis, stated that the inflation estimate might be decreased by 10–20 basis points, but the GDP estimate is unlikely to alter. Given the undershooting of the first quarter’s GDP growth in comparison to the MPC’s prediction and the likelihood of a further undershooting in the second quarter, Icra Chief Economist Aditi Nayar stated
“We believe a stance change to neutral may be appropriate in the October 2024 policy review,” the CPI inflation print adds.
“A short rate-cutting cycle of 25 basis points per month in December 2024 and February 2025 might come after this. The abundant monsoon offers some security for agricultural inflation. Geopolitical unpredictability and the effects of global political developments on inflation dynamics continue to pose a risk, according to Nayar. Three trends stand out,
According to an HSBC report: inflation has been declining, lower GDP data have been slowly showing up, and the external environment has shifted from rate hikes to rate cuts.
“We think that the RBI gains nothing by holding off any longer. We believe that in the next policy meeting on October 9th, it will shift from a hawkish “withdrawal of accommodation” to a “neutral” stance. Then, in the December and February meetings, it will drop the repo rate by 25 basis points each, bringing the rate down to 6%, the report stated.
Concerning The MPC Members
Three new members of the RBI’s monetary policy panel were selected by the Center earlier in October. The central government regularly nominates and appoints these three external members of the six-person panel.
The economist Saugata Bhattacharya, the chief executive and director of the Institute for Studies in Industrial Development, Dr. Nagesh Kumar, and Professor Ram Singh, the director of the Delhi School of Economics at the University of Delhi, are the new members. They join RBI Governor and MPC Chairperson Das, Rajiv Ranjan, serving as Executive Director, and Michael Debabrata Patra, as the Deputy Governor. As external members, Bhattacharya, Kumar, and Singh take the position of Shashanka Bhide, Ashima Goyal, and Jayanth R Varma.
