The Reserve Bank of India’s (RBI) three-day Monetary Policy Committee (MPC) meeting begins today, with the policy announcement set for October 9. All eyes are on the outcome, as the central bank has kept the repo rate unchanged at 6.50% for the last nine consecutive meetings. The RBI has been cautious, aiming to balance inflation control with economic growth.
The MPC, led by RBI Governor Shaktikanta Das, will consider factors such as inflation trends, global economic uncertainties, and domestic growth. Although overall consumer price inflation in August was 3.65%, well within the RBI’s target range, food inflation remains higher at 5.65%. The RBI’s focus on supporting economic recovery has driven its decision to hold the repo rate steady, despite inflationary pressures, particularly in food and fuel prices. However, external factors like rising global crude oil prices, fueled by tensions in West Asia, could prompt the RBI to rethink its stance.
The MPC has recently been reconstituted with three new external members: Professor Ram Singh, Director of the Delhi School of Economics; economist Saugata Bhattacharya; and Dr. Nagesh Kumar, Director and Chief Executive of the Institute for Studies in Industrial Development. Alongside three RBI members, they will be closely watched by market participants and analysts for any indication of future rate changes. While many expect the central bank to maintain its cautious approach, the possibility of a surprise rate hike cannot be ruled out, particularly in light of global developments, such as the US Federal Reserve’s recent 50 basis point rate cut after holding rates steady for eight meetings.
The RBI’s policy announcement on October 9 will be key in shaping future monetary actions amid evolving global economic conditions.
