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RBI Monetary Policy: First of all, let us tell you that under the Reserve Bank of India (RBI) Act, 1934 (amended in 2016), RBI has been entrusted with the responsibility of determining the monetary policy of the country, the objective of which is to increase economic growth and control inflation. Before 2016, RBI used to meet and decide on interest rates. At the same time, the MPC Committee i.e. Monetary Policy Committee takes decisions. Will interest rates fall or not? There are 6 members in the committee.
The RBI Governor acts as the chairman of the committee. Member No. 2 is the Deputy Governor of RBI. Third, there is an officer of the RBI who is nominated by the Central Board. The other three members are eminent experts or professors of economics. This is decided by the government. The tenure of these members is 4 years or till further orders.
Apart from the repo rate, the RBI Monetary Policy Committee announces the reverse repo rate, bank rate, CRR, SLR, SDF rate, MSF rate, LAF, LAF corridor and others in its review meeting.
Each member is entitled to one vote in the Monetary Policy Committee. Each member of the Monetary Policy Committee or Monetary Policy Committee (RBI Monetary Policy Committee) writes a statement indicating the reasons for voting for or against the proposed resolution.
If the votes on the proposed resolution are tied, the vote is decided by the Chairman of the Monetary Policy Committee i.e. the RBI Governor and then the final announcement is made.
What is to be done now?
The Reserve Bank of India (RBI) is expected to keep interest rates steady for the 11th time this week due to higher than expected inflation data. Moneycontrol conducted a survey of 15 economists, bankers and fund managers. In which this matter has come to light. In September, the country’s GDP growth fell to a seven-quarter low of 5.4 percent. This has a negative impact on manufacturing.
start of meeting
It will start from 4th December and important decisions on interest rates will be announced on 6th December. Most of the experts surveyed said that the RBI may not change the stance in the December policy and keep it “neutral”. “Inflation is expected to remain in the 4 per cent range going forward, so a change in RBI stance is expected,” said Murthy Nagarajan, head-fixed income, Tata Asset Management.
In October, the MPC kept the repo rate unchanged at 6.5 per cent, the rate at which the RBI lends to banks, but changed its stance. RBI has now kept the repo rate constant at 6.5 percent for 10 MPC seats. Now there is hope of relief from the prices of vegetables.
“To bring inflation below 5 per cent in H2FY25, food inflation will have to be moderated and kept at a low level,” said Achala Jethmalani, economist at RBL Bank. RBI’s CPI inflation estimate for FY 2025 appears to be at risk of going above 4.5 percent.
India’s retail inflation rose to a 14-month high of 6.2 percent in October, up from 5.5 percent in the previous month, as food inflation rose due to rising vegetable prices.
The government will now announce new figures on November 12. Last month, data showed that food inflation rose to double digits for the first time in 15 months to 10.9 per cent, from 9.2 per cent in the previous month.
In October, the MPC had projected inflation at 4.5 per cent for fiscal year 2025, compared to 4.1 per cent in the second quarter, 4.8 per cent in the third quarter and 4.2 per cent in the fourth quarter. CPI inflation for the first quarter of FY2026 is expected to be 4.3 percent.