The six-member Monetary Policy Committee (MPC), led by Reserve Bank of India (RBI) Governor Shaktikanta Das, commenced a three-day meeting on Tuesday to deliberate on the country’s monetary policy. The committee is to announce its decision today, June 8, amidst speculation that the central bank will maintain the benchmark interest rates at 6.5 per cent, given the easing retail inflation and the need to boost economic growth.
Following the previous MPC meeting in April, the RBI decided to pause its rate hike cycle and retain the repo rate at 6.5 per cent. Prior to this, the central bank had increased the repo rate by a cumulative 250 basis points since May 2022 in an effort to curb inflation.
The MPC’s meeting takes place against the backdrop of a decline in consumer price-based (CPI) inflation, which reached an 18-month low of 4.7 per cent in April. Governor Shaktikanta Das recently hinted that the CPI for May would be even lower than the April figures. The CPI data for May is scheduled to be announced on June 12.
According to experts, central banks globally are also showing signs of pausing or reducing the number of rate hikes as inflationary pressures ease. This trend could further support the RBI’s decision to maintain the status quo.
The outcome of the RBI’s decisions will depend on various factors, including economic indicators, inflationary trends, global economic conditions, and prevailing challenges.
The government has mandated the RBI to ensure that CPI inflation remains within 4 per cent, with a margin of 2 per cent on either side.
In addition to Governor Shaktikanta Das, the other members of the MPC include Shashanka Bhide (Honorary Senior Advisor, National Council of Applied Economic Research, Delhi), Ashima Goyal (Emeritus Professor, Indira Gandhi Institute of Development Research, Mumbai), Jayanth R Varma (Professor, Indian Institute of Management, Ahmedabad), Rajiv Ranjan (Executive Director, RBI), and Michael Debabrata Patra (Deputy Governor, RBI).