RBI Monetary Policy Highlights: Shaktikanta Das-led MPC keeps repo rate unchanged at 6.5%; GDP growth seen at 7%, your EMIs won’t come down right now

RBI Monetary Policy News Live Updates: RBI governor Shaktikanta Das-led Monetary Policy Committee (MPC) kept the key repo rate unchanged at 6.5% along expected lines. Shaktikanta Das said that GDP growth is expected to be at 7% in FY 2024-25 and CPI inflation is projected at 4.5%. The risks are evenly balanced. According to Shaktikanta Das the elephant in the room (inflation) has left the room and is on its way to the forest.

This was the first RBI MPC meeting for the new fiscal year and amidst the global economic uncertainties and with the US Federal Reserve yet to start the rate cut cycle, economists and analysts were of the view that the RBI will keep the repo rate unchanged. This expectation was specially driven by the fact that India's GDP growth for the third quarter came in at a better than expected strong number of 8.4%. CPI inflation, while finally within RBI's comfort zone of 2-6%, is still at an elevated level.

The Reserve Bank of India and the Monetary Policy Committee usually hold a meeting once in two months to decide on the key repo rate. The repo rate is important since it is the rate at which the central bank lends to the commercial banks. It is a key decider of liquidity in the system. A high repo rate means that banks find it costly to borrow money from the RBI, hence keep their own loan rates higher, making borrowing for the common person more expensive. Similarly, a lower repo rate means that banks have earlier access to capital and hence, lending rates are lower, making loans less costly.

RBI initiated a rate hike cycle in 2022 and has since then raised the repo rate by 250 basis points to 6.5%. While the pause button on the repo rate hike has been hit for several quarters now, the rate cut cycle is expected to start in the second half of this year, believe economists. These expectations come on the back of global economic conditions and strong GDP growth numbers which provide RB

06:43 (IST) Apr 05

RBI Monetary Policy Live: RBI MPC meeting April 2024 - know date, time and all other key details

RBI MPC meet schedule April 2024: The Reserve Bank of India's Monetary Policy Committee (MPC) decides India's monetary policy, especially the repo rate, which impacts borrowing and loan rates. The upcoming MPC meeting is scheduled from April 3rd to 5th, 2024, with the outcome set to be announced on April 5th at around 10 AM by RBI governor Shaktikanta Das.

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06:40 (IST) Apr 05

RBI Monetary Policy Live: Both repo rate and stance likely to remain unchanged

“We wait eagerly for RBI’s first meeting of FY25, scheduled for 5th April. With the policy repo rate remaining on hold at 6.50% for more than a year (RBI delivered the last rate hike in Feb 2023), the main focus has been on liquidity management and the evolution of “effective interest rate” in money markets. In Oct’23, when US rates were selling off, the RBI did not hike the repo rate, but delivered an effective rate hike by tightening liquidity and pushing up the short-term rates eventually to 6.90%, 40bps higher than the policy rate. From Jan’24, the central bank started infusing liquidity to reduce “over-tightening” risks, so as to push down short-term rates in a lower range of 6.50-6.75%. In March thus far, MIBOR has averaged 6.68%, although currently it is around 6.83% due to advance tax and GST outflows. RBI has been doing both VRR and VRRR to fine tune liquidity and guide it more toward neutral territory. As on 8th March, net durable liquidity was INR1.9trn surplus, as per the latest RBI data. In this backdrop, we present the monetary policy preview for April. The main focus of the upcoming monetary policy is whether the MPC will agree to change the current monetary policy stance of "withdrawal of accommodation" to neutral.Both repo rate and stance likely to remain unchanged under base case scenario; but can’t rule out the possibility of a change of stance to neutral, given past evidence of the central bank surprising with its decision, particularly in April.We expect the RBI to maintain a pause yet again in the 5th April policy, holding the repo rate steady at 6.50%. As far as the stance goes, we think there is a small likelihood that it could change to “neutral”, from the current “withdrawal of accommodation”, but if that happens, it will be a positive surprise for the market. If RBI changes the stance to neutral, then we expect the accompanying statement and comments to be hawkish. On the other hand, if the central bank decides to maintain the “withdrawal of accommodation” stance, as a majority of the market participants expect, then we would expect the commentary to be less hawkish. We expect the RBI to keep its FY25 CPI inflation forecast unchanged at 4.5%, while the next fiscal year's growth forecast could be raised to 7.4%, from the current 7.0%. Our own CPI forecast for FY25 is 4.6%, similar to RBI's, but our real GDP growth forecast for next fiscal year is 6.5%, lower than the central bank's estimate. Bloomberg consensus forecast for FY25 CPI inflation is 4.5% and 6.6% for real GDP growth,” says Kaushik Das, chief economist, India & South Asia, Deutsche Bank.

06:39 (IST) Apr 05

RBI Monetary Policy Live: Repo rate likely to be maintained at 6.5%

“We think the Reserve Bank of India (RBI) will likely maintain the repo rate at 6.5 percent. If this goes as anticipated, it would reinforce stability in the financial markets. This decision aligns with market expectations and reflects the RBI's commitment to managing inflation and supporting economic growth. Consequently, we anticipate it could sustain positive market sentiment, bolstering investor confidence in the domestic economy. However, any unexpected deviation from this anticipated decision could introduce uncertainty and potentially lead to fluctuations in market dynamics, influencing investment strategies in the short term,” Suman Bannerjee, CIO, Hedonova on expectations from the MPC.