RBI MPC highlights: Deposit-credit divergence could lead to liquidity management issue, says Das

RBI Monetary Policy Meeting 2024: Catch all the latest highlights on RBI's monetary policy announcements here

RBI MPC highlights Aug 8: 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 panel maintained its stance of "withdrawal of accommodation."

The growth forecast for the current financial year remains unchanged at 7.2 per cent. However, the forecast for the first quarter was revised to 7.1 per cent from the earlier projection of 7.3 per cent. 

The MPC was widely expected to maintain its current interest rates at its Thursday meeting. However, due to mounting concerns about global economic conditions, investors are anticipating a more accommodative tone from the central bank's officials. 

RBI Governor Shaktikanta Das stated: “Headline inflation, after remaining steady at 4.8 per cent, climbed to 5.1 per cent in June… The expected moderation in inflation in Q2 (of the current financial year) due to base effects is likely to reverse in the third quarter… Ensuring price stability eventually leads to sustained growth.”

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 commitee 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.

The monetary policy statement will be broadcast live at 10 am tomorrow, August 8, on RBI’s social media handles and Business Standard’s homepage.