Three-Day RBI Monetary Policy Committee Meeting Commences to Harmonize Economic Growth and Inflation
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New Delhi, Dec 4 (NationPress) The three-day Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting commenced on Wednesday, as the central bank aims to synchronize promoting economic growth with controlling inflation.
The attention is once more directed towards the repo rate, which has remained unchanged at 6.5 percent over the last nine MPC meetings. Experts suggest that maintaining this status may persist for a while longer, as justifying an immediate rate cut could prove challenging for the MPC, especially since their commentary has emphasized that achieving durable disinflation is their primary objective.
During the second quarter of FY25, the GDP grew by 5.4 percent, while the Consumer Price Index (CPI) was recorded at 6.21 percent in October, surpassing the RBI’s forecast of 4.8 percent.
According to Emkay Global Financial Services, although the RBI’s growth and inflation predictions may undergo considerable revisions, an immediate rate cut is unlikely.
“The timing and opportunity for cuts are limited and complicated due to volatile global factors. Additionally, the RBI may also consider the foreign exchange implications of rate cuts, including liquidity effects, sterilization costs, and imported inflation,” the note stated.
While inflation is anticipated to decrease by the end of March 2025, primarily due to a reduction in food prices, it remains far from the 4 percent stability that the RBI is targeting to prevent triggering a feedback loop into generalized inflation. Recent RBI communications have been firm on this matter, assuming that growth remains robust.
Bajaj Broking Research noted that the RBI strives for sustainable control without hindering economic advancement.
“India's GDP demonstrates resilience. The balance of policy between growth and inflation will be critical, and a 'neutral' stance would signify a balanced economic strategy,” the brokerage remarked.
The outcomes of this meeting will be closely monitored by markets and analysts, as they will offer further insights into the RBI's strategy for navigating the complex interplay between growth and inflation.
This marks the fifth MPC meeting for FY25. In the previous meeting, the RBI maintained the repo rate at 6.5 percent and adjusted its stance to 'neutral'.
