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RBI monetary policy live: No burden on common man; RBI maintains repo rate for the 7th consecutive time

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RBI monetary policy live: The results of the Monetary Policy Committee meeting of the Reserve Bank of India (RBI) (MPC Meeting Results) have been announced. While explaining the decisions taken in the meeting, Reserve Bank of India Governor Shaktikanta Das said that this time also no change has been made in the repo rate, that is, these rates have been kept constant at 6.5 percent. This means that there is going to be no change in your EMI. Five out of six members present in the meeting were in favor of keeping the repo rate unchanged.

Repo rate remains the same from February 2023

The Reserve Bank of India (RBI) last increased the repo rate on February 8, 2023 last year. Then RBI increased it by 25 basis points or 0.25 percent to 6.5 percent. Since then, these rates have been kept unchanged in six consecutive MPC meetings and this time too it was already expected that there would be no change in it. Along with the repo rate, the Reserve Bank has kept the reverse repo rate constant at 3.35%. MSF rate and bank rate will remain at 6.75%. Whereas, the SDF rate is stable at 6.25%.

RBI monetary policy live: GDP growth expected to be 7%

RBI monetary policy live:  Along with the announcement of keeping the repo rate stable, RBI Governor Shaktidans Kant said regarding inflation that the Monetary Policy Committee is keeping an eye on the prices of food items (Food Inflation). There is a slowdown in inflation. In view of this, the inflation target has been maintained at 4 percent in the MPC meeting. Regarding GDP growth, Shaktikanta Das said that India’s real GDP growth estimate in FY24 has been kept above 7 percent. Even in the earlier estimates, the Reserve Bank had kept it at 7.3 percent. Along with this, he said that demand is continuously showing strength in the rural sector.

The retail inflation rate for FY25 is estimated at 4.5%. Whereas the retail inflation estimate for FY24 has been maintained at 5.4%. Apart from this, RBI has increased the GDP growth estimate for the first quarter of the financial year 2025 from 6.7 to 7.2%. Whereas in the second quarter the GDP estimate has been increased from 6.5% to 6.8%. It has been increased from 6.4% to 7% in the third quarter and 6.9% in the fourth quarter.

This is how repo rate affects EMI

RBI monetary policy live: Repo rate is the rate at which the central bank of a country lends money to commercial banks in case of any shortage of funds. Repo rate is actually used by monetary authorities to control inflation. In fact, the effect of repo rate is seen on the EMI of loans taken by common people from banks. If there is a cut in the repo rate then the EMI of home and car loan of common people decreases and if the repo rate increases then the prices of car and home loan increase.

The country’s economy is strong

Shaktikanta Das further said that there has been stability in the Indian currency for the last one year and it will remain so in future also. He said that there is a need to be alert on new shocks related to the supply chain. Headline inflation this year remains high with considerable volatility and the 4% target has not yet been achieved. However, amidst uncertainty at the global level, the country’s economy is showing strength. He said that the country’s economic growth is accelerating and it is ahead of most forecasts.

Business, Top

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

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RBI MPC Meeting: 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 Shakti Kanta 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.

RBI MPC meeting: What experts say?

RBI MPC Meeting: Aditi Nayar, chief economist and head (of 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 percent, 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.

RBI MPC Meeting: 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 percent in the July-September quarter on booster shots from government spending and manufacturing.

RBI MPC Meeting: Madan Sab Navis, 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.”

RBI MPC Meeting: 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.”

RBI MPC Meeting: 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.