RBI MPC Highlights: Sensex, Nifty Close In Red As RBI Keep Repo Rate Unchanged At 6.5%
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The Reserve Bank of India (RBI) is set to announce the results of its Monetary Policy Committee (MPC) meeting on Friday. The MPC will convene to assess the benchmark interest rate and discuss the future economic direction for India. The meeting, chaired by RBI Governor Shaktikanta Das, was originally scheduled for December 4-6, 2024. The central bank last raised the repo rate in February 2023 and has maintained the key rates unchanged since then.
The MPC's decision will be announced at approximately 10 am on Friday. For official updates, including press releases, meeting minutes, and related documents, visit the RBI's official website. Key announcements will also be shared on the RBI's social media platforms, including X and LinkedIn.
In the last MPC meeting, held from October 7-9, the committee decided to keep the benchmark interest rate at 6.5 per cent, marking the tenth consecutive meeting with no change in rates. Experts anticipate that the RBI will maintain the same stance on rates in this upcoming meeting as well.
However, Nomura predicts a 25 basis point repo rate cut by the RBI in this Monetary Policy Committee meeting, as outlined in its latest report. If correct, this would lower the benchmark repo rate to 6.25 per cent.
While 42 out of 49 economists surveyed by Bloomberg anticipate no change, Nomura assigns a 75 per cent probability to its forecast, reflecting strong confidence in a move toward rate easing. Additionally, the brokerage expects a total of 100 basis points in rate cuts by mid-2025, which would bring the repo rate down to 5.50 per cent.
Nomura's expectation of a rate cut is driven by a significant slowdown in India’s GDP growth and a subdued inflation outlook. The country’s GDP growth for the second quarter of this fiscal year dropped to 5.4 per cent year-on-year, down from 6.7 per cent in the first quarter, indicating a notable decline in private demand.
Persisting Headline Inflation Are Concerning Factors: Expert
Parijat Agrawal, Head of Fixed Income at Union Asset Management, said that the Monetary Policy Committee’s decision to keep the Repo Rate steady while reducing the Cash Reserve Ratio (CRR) by 50 basis points to ease tight liquidity conditions was in accordance with our expectations. “The moderation in growth and the persistence of headline inflation are concerning factors that may necessitate timely policy support,” he added.
The Unchanged Repo Rate Demonstrates A Nuanced Approach: Expert
Pankaj Sharma, CEO of Religare Finvest, said, "The RBI stance of maintaining the repo rate at 6.50 per cent demonstrates a nuanced approach to our current economic challenges. While we would have welcomed a rate cut, we understand the delicate balancing act of managing inflation against economic growth and recognise the RBI's cautious approach."
"The current economic indicators present a complex landscape. With inflation rates climbing to 6.2 per cent - significantly above the RBI's 4 per cent target - and our GDP growth decelerating to 5.4 per cent in the second quarter, we're navigating turbulent economic waters," he added.
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