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RBI MPC 3-Day Meeting Begins: What’s Expected?


Even as the three-day RBI MPC meeting has started on Wednesday, all eyes are on the interest rate-setting panel’s decision on Friday. Experts, however, expect a status quo on the key policy rates as inflation is gradually coming closer to the RBI’s target level and economic growth is picking up. RBI Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) has begun its three-day deliberations on Wednesday, December 6.

Das would unveil the decision of the six-member MPC on the last day of the meeting — December 8 morning. Aditi Nayar, chief economist and head (research and outreach) at ICRA, said, “With the GDP data for Q2 FY2024 appreciably higher than the MPC’s last forecast, and continuing concerns on various aspects of food inflation, we expect the MPC to pause in its December 2023 review, amidst a fairly hawkish tone of the policy document. ” The RBI has left the repo unchanged in its past four bi-monthly monetary policies.

The RBI had last increased the repo rate In February to 6. 5 per cent, thus ending the interest rate hiking spree which began in May 2022 in the aftermath of the Russia-Ukraine war and subsequent disruptions in the global supply chain resulting in high inflation in the country. Vimal Nadar, senior director of research, Colliers India, said, “The central bank is expected to keep the repo rate unchanged at 6.

5 per cent as the spreads of home loan lending rates amongst the banks and financial institutions continue to narrow in the past few months. This will continue to provide greater visibility to prospective homebuyers with respect to their long -term financial commitment of buying a house along with short-term cash flows in terms of EMIs. ” He added that the macroeconomic indicators continue to reinforce the robust domestic outlook with GDP exceeding expectations during July-Sept at 7.

6 per cent. While inflation moderated to 4. 87 per cent in October, the Bank will continue to emphasize on taming inflation levels closer to 4 per cent while ensuring accelerated growth.

India retained the tag of the world’s fastest-growing major economy, with its GDP expanding by a faster-than-expected rate of 7. 6 per cent in the July-September quarter on booster shots from government spending and manufacturing. Madan Sabnavis, chief economist of Bank of Baroda, said the central bank is most likely to maintain the status quo on rates as well as stance this time.

“The high growth witnessed in Q2 in GDP will provide assurance that the economy is on track. The low core inflation numbers in the last few months will provide comfort that there is no need to increase rates even while headline inflation is likely to be volatile in the upward direction,” he said. Madhusudan Sharma, executive director of Bharat Housing Network, said, the Reserve Bank of India (RBI) is likely to keep interest rates unchanged in its upcoming monetary policy review as inflation is in control.

The central bank would want to support the GDP growth which is picking up momentum. This favorable stance could bode well for the housing sector as well, where we anticipate continued strong demand for home loans across segments. Additionally, the sector will also get a boost from expected supportive policy measures particularly in rural and semi-urban areas.

” Sanjay Bhutani, director of Medical Technology Association of India (MTaI), said, “The Reserve Bank of India’s recent MPC meetings have kept the policy rate unchanged, aligning with market expectations. We anticipate a similar outcome for this upcoming meeting. However, with inflation on a downward trend, an easing of interest rates could be on the cards, potentially occurring as early as February-March 2024.

This would be a positive development for all sectors, particularly capital and research-intensive industries like the medical technology sector. ” The retail inflation eased to a four-month low of 4. 87 per cent in October, mainly due to cooling prices of food items.

The Reserve Bank’s Monetary Policy Committee (MPC), in its October meeting, projected CPI inflation at 5. 4 per cent for 2023-24, a moderation from 6. 7 per cent in 2022-23.

Mohit Jain, Managing Director, Krisumi Corporation, opined that this successive pause in interest rate hikes reiterates RBI’s commitment to provide broad-based growth in the economy with financial stability. .

From: news18

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