Rama Krishna Sangem
The Reserve Bank of India’s Monetary Policy Committee (MPC) decided to keep the benchmark rate unchanged at 6.5 per cent for the ninth consecutive time. The MPC convened its third bi-monthly policy meeting for FY25 from August 6 through August 8.
The MPC was widely expected to maintain its current interest rates at its Thursday meeting, according to widespread expectations. However, due to mounting concerns about global economic conditions, investors are anticipating a more accommodative tone from the central bank’s officials.
A unanimous consensus among 59 economists surveyed by Reuters in late July predicts that the RBI will keep the repo rate unchanged at 6.50 per cent for the ninth consecutive meeting. Nevertheless, market participants are optimistic that the RBI might adopt a less stringent position on inflation. This expectation is fueled by the recent deterioration in global market sentiment and the high probability of an interest rate cut by the United States Federal Reserve in September.
A Business Standard poll earlier indicated that economic experts anticipate that the RBI will maintain this status quo for the ninth consecutive policy review. They cited ongoing inflation and food prices as factors likely influencing this decision.
The committee evaluates the major economic metrics such as inflation and growth figures. After this, the MPC takes a decision on whether keep the repo rate unchanged, hike the rate to control inflation by making borrowing more expensive or cut the repo rate to making borrowing cheaper and stimulate growth.
Domestic growth resilient: Guv Das
The MPC determined that it is crucial for monetary policy to remain consistent while closely monitoring inflation. The panel emphasised maintaining a primary focus on inflation to support sustained economic growth, RBI Governor Shaktikanta Das said on Thursday. This shows the businesses will have to wait for some more months before the interests begin climbing down.
