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Business News/ Economy / RBI monetary policy meeting begins today: Here's all you need to know
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RBI monetary policy meeting begins today: Here's all you need to know

RBI may keep rates steady on December 8. Experts are of the view that the RBI will stay cautious about inflation which is still above its 4 per cent target.

RBI MPC meeting started on Wednesday, December 6 and the outcome is due on Friday, December 8. (Mint)Premium
RBI MPC meeting started on Wednesday, December 6 and the outcome is due on Friday, December 8. (Mint)

The three-day monetary policy meeting of the Reserve Bank of India (RBI) began on Wednesday, December 6. RBI Governor Shaktikanta Das will disclose the decision of the Monetary Policy Committee (MPC) around 10 am on Friday, December 8.

There is widespread anticipation of rates staying as it is after the RBI MPC meeting even as inflation has eased significantly and economic growth remains strong.

“There is a strong likelihood that RBI-MPC will keep the benchmark repo rate unaltered at 6.50 per cent in the upcoming meeting and thereby continue with the pause mode for the fifth consecutive policy review. It’s also unlikely that there will be any revision in the monetary policy stance of withdrawal of accommodation," said Suman Chowdhury, Chief Economist and Head – Research, Acuité Ratings & Research.

Date and time

The three-day meeting of the RBI's rate-setting panel started on Wednesday, December 6 and the outcome is due on Friday, December 8.

RBI Governor Shaktikanta Das will unveil the MPC decision around 10 am on Friday (December 8).

After the MPC decision which starts around 10 am, RBI Governor Das will address a post-policy press conference at noon on December 8.

Also Read: RBI Monetary Policy Committee meeting: Check the date, time, and where to watch here

Expectations

Experts are of the view that the RBI will stay cautious about inflation which is still above its 4 per cent target. Crude oil prices have been volatile and concerns around El Nino and agricultural output persist. This will make the central bank stick to its pause mode.

"We expect RBI to be cautious on the inflation front till the concerns on El Nino and agricultural output subside. Also, the growth momentum in the economy remains strong and the transmission of increased interest rates is still a work in progress. Therefore, there is a strong rationale on the part of RBI to continue with the pause mode for the next six months," said Chowdhury.

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The RBI's fight against inflation is likely to continue for a longer period until and unless inflation comes below the 4 per cent mark sustainably.

Also Read: RBI Monetary Policy Meeting: Will the RBI hold interest rates but change its policy stance? Here's what 5 experts say

Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics at Barclays estimates that CPI inflation rose above the RBI's tolerance limit of 6 per cent in November, driven higher by elevated vegetable and pulses prices. However, Bajoria believes that the likely stable core inflation and robust growth momentum suggest no rate moves in either direction at the MPC meeting this week.

Also Read: US Fed, RBI gear up for their last policy meet of the year; will a pause continue? When to expect rate cuts?

"We estimate that CPI inflation rose in November to 6.15 per cent year-on-year (YoY), a sharp reversal from the moderating trajectory over the past couple of months. CPI inflation in October came at 4.9 per cent and in September stood at 5 per cent. We expect the RBI to remain on a cautious hold this week at its MPC meeting. While stable core inflation should be a relief, it will be cautious of the impact of elevated food inflation on inflation expectations," said Bajoria.

Madhavi Arora, Lead Economist at Emkay Global Financial Services pointed out that a benign global narrative, tighter system liquidity and easing core inflation despite stronger growth, will be the backdrop of the upcoming MPC meeting.

Arora believes the swift change in global risk appetite and low volatility provide comfort to the RBI in lowering the risk of financial instability which reduces the need to conduct OMO (open market operation) sales.

Arora sees the possibility of the policy focus reverting to the domestic narrative, wherein the resurgence of food inflation and slow policy transmission will be key.

"We expect the RBI to softly prod banks to nudge up SA (savings accounts) rates while ruling out any explicit policy directive to re-regulate such rates," said Arora.

Read all economy-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 06 Dec 2023, 11:27 AM IST
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