Days after the government unveiled the Union Budget 2024, the Reserve Bank of India (RBI)-led Monetary Policy Committee (MPC) is scheduled to make its interest rate announcement on February 8.
In a previous news agency Moneycontrol survey, bankers and economists projected that key rates would remain unchanged, and most respondents anticipated that the MPC would continue its current policy of withdrawing from accommodation.
The following are the five main points to be aware of in the RBI Policy released on February 8:
Repo rate at 6.5 percent
The interest rate at which the central bank gives short-term money to banks is known as the repo rate, and it is now 6.5 percent. In this round, will the MPC alter the repo rate? Not likely. In a Moneycontrol poll, the majority of experts and bankers predicted that the central bank will maintain the current key rates.
Monetary Policy trendsetter
A neutral position implies that rate action can occur on either side, whereas an accommodating stance shows the lean is towards a rate cut. The rate posture at the moment is removal from accommodations. Some analysts predict that the MPC will shift to a neutral posture in response to a smaller fiscal deficit and lower borrowing figures.
GDP rate
Following the significant positive surprise in the July–September statistics, the RBI increased its GDP growth prediction for 2023–24 by an astounding 50 basis points to 7% in the most recent policy review.
Inflation numbers
The RBI kept the fiscal year’s retail inflation goal at 5.4 percent in its most recent policy review, even in the face of inconsistent monsoon rains and a shaky prognosis for food prices due to a surge in the price of crude oil globally.
The December inflation rate was 5.7% less than anticipated by the market. What’s more, the core inflation—that is, the portion of inflation unrelated to food and oil—has been declining.
Liquidity stance
Experts in the money market predict that the central bank would retain a strict stance on liquidity this time. The banking system’s liquidity has been tight over the past few months, and the RBI has offered sufficient assistance when required through its multiple variable rate repo auctions.
