The Reserve Bank of India (RBI) on Monday began its three-day monetary policy meeting which will run from October 7 to October 9. The meeting gains significance because the central bank has kept the repo rate unchanged for the last nine consecutive meetings.
The repo rate is currently at 6.50 per cent and has remained steady since the RBI adopted a cautious stance to balance inflation control and economic growth. Headed by RBI Governor Shaktikanta Das, the Monetary Policy Committee (MPC) is expected to weigh key factors like global economic uncertainties, inflationary trends, and domestic growth prospects.
It is worth noting that inflation continues to be a challenge, especially in food and fuel prices as they saw a rise earlier this year. As per the Ministry of Statistics & Programme Implementation data, All India Consumer Price inflation in August was 3.65 per cent, which is under the RBI target band. However, the food inflation stands at 5.65 per cent which is above the RBI's 4 per cent medium-term target.
The RBI managed to keep the repo rate steady despite these inflationary pressures to support economic recovery post-pandemic. However, external factors, like the rising global crude oil prices on tensions in West Asia may compel the RBI to reconsider its current stance.
Earlier this month the Central government appointed three new members to the MPC. The newly reconstituted committee consists of the Governor of the Reserve Bank of India as the Chairperson, ex officio, the Deputy Governor of the Reserve Bank of India, in charge of monetary policy- Member, ex officio, and one officer of the Reserve Bank of India, nominated by the Central Board - Member, ex officio. The new external members included in the MPC are Professor Ram Singh, Director of Delhi School of Economics, University of Delhi, Saugata Bhattacharya, economist; and Dr. Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development.
The committee meeting is also significant given the steep interest rate cuts by the US Feds. On September 18, the US Federal Reserve announced a 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. The outcome of the MPC meeting will be announced on October 9, and will set the tone for future monetary policies amid the changing global economic landscape.
(With ANI Inputs)
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