 "Will RBI announce a rate cut? MPC meet date, time, and what to expect")
The Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) will meet this week to assess the current economic landscape and announce key decisions regarding the repo rate, the interest rate at which the central bank lends to commercial banks. Led by RBI Governor Shaktikanta Das, the meeting will take place from 4 to 6 December, with the announcements scheduled for 10 AM on Friday, 6 December.
This meeting comes amidst economic challenges, including lower-than-expected GDP figures, high inflation, and a drop in production, which have heightened public concerns.
RBI MPC Dec meet: When and where to watch?
This is the fifth RBI MPC meeting for the financial year 2024-25 (FY25), with previous meetings held in April, June, August, and October. The final meeting for FY25 is scheduled for February.
The December MPC will convene from 4 to 6 December, with the decisions announced live by Governor Shaktikanta Das at 10 AM on December 6.
The announcement will be streamed live on the RBI’s YouTube, Facebook, and X platforms. Updates will also be available on the Business Standard website and social media platforms.
Highlights from the October MPC meet:
- Repo rate unchanged at 6.5 per cent
- Policy stance shifted to ‘Neutral’ from ‘Withdrawal of Accommodation’
- Standing Deposit Facility (SDF) rate unchanged at 6.25 per cent
- Marginal Standing Facility (MSF) rate unchanged at 6.75 per cent
- Bank Rate unchanged at 6.75 per cent
- MPC members voted 4:2 to maintain the status quo
The RBI maintained its FY25 GDP growth projection at 7.2 per cent. Quarterly GDP growth estimates were revised as follows:
- Q2 FY25: Reduced to 7 per cent from 7.2 per cent
- Q3 FY25: Raised to 7.4 per cent from 7.3 per cent
- Q4 FY25: Raised to 7.4 per cent from 7 per cent
- Q1 FY26: Raised to 7.3 per cent from 7.2 per cent
Will the RBI change the repo rate?
The RBI has maintained the repo rate at 6.5 per cent for the past nine meetings, and it is likely to hold this stance again. Despite calls for a rate cut, the central bank is focused on balancing inflation control with economic growth.
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In recent weeks, prominent leaders, including Chief Economic Adviser (CEA) V Anantha Nageswaran, Commerce Minister Piyush Goyal, and Finance Minister Nirmala Sitharaman, have suggested the need to ease borrowing costs for businesses. However, the RBI has prioritised food inflation as a critical factor in its monetary policy decisions.
The CEA has proposed excluding food prices from the inflation basket, citing that the central bank cannot control such variables. The RBI has yet to respond to this suggestion.
What is driving economic unease?
Inflation reached a 14-month high of 6.21 per cent in October, largely driven by high food prices and geopolitical disruptions affecting supply chains.
India’s GDP growth for Q2 FY25 slowed to 5.4 per cent, the lowest in two years, down from 8.1 per cent in the same period last year. It was also significantly lower than the RBI's own projections of 7 per cent for the quarter. The decline is attributed to weak performance in manufacturing and mining.
Despite this, both the CEA and Economic Affairs Secretary Ajay Seth have reassured the public that the government remains on track to achieve its 6.5 to 7 per cent growth target for FY25.
Will the RBI MPC revise its growth forecast?
Following the release of Q2 GDP figures, several rating agencies have adjusted their FY25 growth projections. The Finance Ministry now expects growth to fall between 6.5 and 7 per cent. While the RBI’s initial forecast was 7.2 per cent, it remains to be seen if the MPC will revise this figure during the upcoming meeting.
Shaktikanta Das: End of tenure or another term?
Shaktikanta Das’s tenure as RBI Governor is set to end on 10 December. Appointed in December 2018, there is speculation that he may be granted another term.