In June of this year, the RBI Governor decided to keep the repo rate at 6.5% during the eighth Monetary Policy Committee (MPC) meeting.
**In Short:**
– The RBI Governor will announce the repo rate decision on August 8.
– Economists expect the RBI to keep the current repo rate at 6.5%.
– The RBI has maintained the repo rate at 6.5% since February 2023.
RBI Governor Shaktikanta Das will reveal the Monetary Policy Committee’s (MPC) decision at 10 AM on Thursday, following the conclusion of their three-day meeting, which started on Tuesday.
The MPC, consisting of six members—three from the central bank and three external experts—sets India’s benchmark interest rate, the repo rate. This rate affects the cost of borrowing for banks and, indirectly, influences loan interest rates for businesses and individuals.
This is the third MPC meeting of the year, after sessions in April and June. The last meeting was in February, and the next one is scheduled for October 7-9. The MPC meets over three days before announcing its decision at the end of the session.
**In Short:**
– **Suman Bannerjee**, Chief Investment Officer at Hedonova, expects the RBI to keep the repo rate at 6.5%. He notes that despite ongoing inflationary pressures, particularly from rising food prices, the RBI is likely to maintain its current rate to balance economic growth and price stability. The RBI’s cautious approach aims to address inflation without harming economic momentum.
– **YES Bank economists** share this view, suggesting that the RBI will likely hold the repo rate steady. They highlight that while inflation may drop to around 4% in the second quarter of FY25, it is expected to rise again in subsequent quarters. The RBI is anticipated to wait until inflation consistently aligns with its 4% target before making any adjustments.
– **Pradeep Aggarwal**, Founder and Chairman of Signature Global (India) Ltd, agrees with the expectation that the RBI will maintain the repo rate for the eighth consecutive meeting. He views this as a balanced approach given persistent food inflation, even though the Consumer Price Index (CPI) is within the target range. He also notes that potential rate cuts might be considered in the second half of the fiscal year if inflation continues to decline.
– The RBI has kept the repo rate at 6.5% since February 2023. The last adjustment occurred in February 2023, when the rate was increased from 6.25% to 6.5%. Prior to that, the central bank had raised the rate six times between May 2022 and February 2023, from 4% to the current 6.5%.