Governor Shaktikanta Das is expected to make an announcement at the RBI MPC meeting soon.

In February 2023, Shaktikanta Das the Reserve Bank of India (RBI) took measures to control inflation by increasing the benchmark interest rate from 6.25% to 6.5%. Shaktikanta Das, the Governor of RBI, is set to unveil the bi-monthly policy on Thursday, and expectations are leaning towards a sustained pause on the key interest rate.

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The current repo rate stands at 6.5%, and the central bank has maintained it since the last hike in February 2023. The move was driven by global economic developments contributing to inflation. In the December 2023 meeting, the rate remained unchanged. Although retail inflation peaked at 7.44% in July 2023, it has shown a decrease in the current fiscal year, standing at 5.69% as of December 2023, albeit within the RBI’s comfortable range of 4-6%.

The Monetary Policy Committee (MPC), chaired by Governor Shaktikanta Das, commenced its three-day discussions on Tuesday, with the policy announcement scheduled for Thursday morning. Experts across various fields anticipate that the central bank will maintain the repo rate at 6.5% for the sixth consecutive time, citing concerns about inflation.

The government has directed the RBI to keep retail inflation, based on the Consumer Price Index (CPI), at 4%, with a permissible margin of error of 2%. The MPC’s responsibility is to set the policy repo rate with the dual objectives of promoting growth and achieving the inflation target.

As the RBI MPC Meet 2024 unfolds, experts predict a unanimous vote in favor of maintaining the status quo, shifting from the current tightening bias to a more neutral stance. Analysts from Nomura told Reuters that they anticipate such a decision.

Ahead of the RBI announcement, the stock market responded positively to the RBI MPC Meeting 2024. The Sensex opened at 72,404, up more than 200 points, while the Nifty opened at 21,988. Market sentiments are influenced by the anticipation of the central bank continuing the pause in rate adjustments. A Reuters poll of 60 economists in early February suggests that the RBI is likely to maintain the key repo rate at 6.5% at least until July 2024.

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