Will MPC continue with its current rates and stance under the RBI’s August 10th policy?

The monetary policy meeting this week takes place in the midst of a noticeable increase in vegetable prices, an unevenly distributed monsoon pattern, and a diverging global monetary policy cycle. The Reserve Bank of India (RBI) is expected to maintain the present repo rates, maintaining the status quo for both policy rates and posture, despite the growing pressures of seasonal inflation.

The six-member Monetary Policy Committee (MPC), which is chaired by RBI Governor Shaktikanta Das, will meet over the course of three days, from August 8 to 10, with the policy decision to be made public at 10 a.m. on that day.

 

The RBI decided to maintain the repo rate at 6.5 percent for a second straight session at the June policy assembly. The unanimous decision by the MPC to keep the repo rate unchanged signaled a pause after a string of rate increases during the previous six policy iterations.

In an attempt to control inflation, the central bank has already coordinated a total 250 basis point increase in the repo rate since May. This was the second time since the April policy review that the RBI chose to maintain the status quo.

 

However, Governor Das emphasized the MPC’s willingness to swiftly and appropriately make future choices at the June assembly. He also emphasized the need to vigilantly monitor changing inflationary conditions, much like maintaining a “Arjuna’s eye” on the situation.

 

The MPC’s decision, which prioritized the “withdrawal of accommodation” to make sure inflation adheres to the predetermined objective while keeping a close eye on promoting economic development, leaned toward a 5:6 majority in the meantime.