Wed Oct 09 04:50:50 UTC 2024: ## RBI Monetary Policy Committee Meeting: No Rate Cut Expected, Focus Remains on Inflation
**Mumbai:** The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will meet this week, beginning Monday, under the chairmanship of Governor Shaktikanta Das. While experts anticipate the repo rate to remain unchanged, the focus will be on managing inflation, particularly amid rising crude oil and commodity prices triggered by the escalating conflict between Israel and Iran.
This meeting holds significance as it will be the first for the newly constituted MPC, which includes three new external members. The outcome of the meeting, including any policy decisions, will be announced on Wednesday by Governor Das.
The current repo rate, at 6.5%, has been in effect since February 2023. While economists anticipate potential rate cuts in December and subsequent meetings, they remain cautious given the recent inflationary pressures.
The RBI’s target for inflation, based on the consumer price index (CPI), is set at 4%. While inflation has remained within the target band in July and August, experts predict a surge above 5% in September and October due to rising core inflation, a key indicator of changes in the cost of goods and services.
The MPC’s decision to maintain a cautious stance is also influenced by the recent actions of other central banks. While the Federal Reserve in the US has lowered interest rates by 0.50%, and some developed countries have followed suit, the RBI is unlikely to mirror these moves.
“The MPC is unlikely to loosen its stance, considering the upward trajectory of core inflation,” stated Madan Sabnavis, Chief Economist at Bank of Baroda. “The meeting will likely see no rate cut, but we expect reductions of 25 basis points each in December and February next year,” said Aditi Nayar, Chief Economist at ICRA.
The RBI’s decisions this week will be closely watched by market participants and economists, as they provide insights into the bank’s approach to navigating the current economic landscape.
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