RBI MPC meeting begins today: What to expect

The Reserve Bank of India Monetary Policy Committee (MPC) meets for the first time this year, on February 6, 2024. Headed by RBI Governor Shaktikanta Das, the six-member MPC will conclude its deliberations on February 8, 2024, when Shaktikanta Das will disclose the MPC’s decision at 10 am on Thursday. 

Will RBI maintain status quo on repo rate?

For five times in a row now, the RBI MPC has kept the repo rate at 6.5 per cent. The benchmark interest rate was last raised in February 2023 to 6.5 per cent from 6.25 per cent. It remains to be seen what RBI MPC decides this time following the Interim Budget.

“The RBI policy meeting will start on Tuesday and it is expected to maintain the status quo in line with the US Fed,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal.

According to a report by SBI Research, the Reserve Bank of India (RBI) in its February Monetary Policy Committee (MPC) review meeting is expected to again put a pause on the repo rate.

The US Federal Reserve in its January meeting voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged.

"We expect the RBI to continue pause stance in upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts," said SBI Research Report.

Policy stance

We believe the stance should continue to be withdrawal of accommodation, SBI Report said.

What is repo rate?

The repo rate is the rate of interest at which RBI lends to other banks.

RBI unlikely to cut rates before June: SBI

The SBI Research Report said said that "the first repo rate rate cut could be on the table from June 2024. “Aug'24 looks the best bet now…."

“RBI is unlikely to precede the Fed in the hiking cycle and will likely follow suit. So mostly towards the latter half of this year is a more probable case of easing,” said Madhavi AroraLead – Economist | Emkay Global Financial

RBI MPC members

The MPC comprises the RBI Governor, 2 deputy governors, and 3 external members

1) Shaktikanta Das, Governor of RBI

2) Michael Debabrata Patra, Deputy Governor of RBI

3) Rajiv Ranjan, Officer of RBI nominated by the Central Board, Member

4) Prof. Ashima Goyal, Professor, Indira Gandhi Institute of Development Research, Member

5) Prof. Jayanth R. Varma, Professor, Indian Institute of Management Ahmedabad, Member

6) Dr. Shashanka Bhide, Senior Advisor, National Council of Applied Economic Research, Member.