RBI MPC Meeting: Gov Shaktikanta Das Set to Reveal Key Repo Rate Decision on Oct 9 – Will a Rate Cut Surprise the Markets?

The Reserve Bank of India (RBI) is holding a three-day Monetary Policy Committee (MPC) meeting starting today, October 7, and ending on October 9. The final decision will be announced by RBI Governor Shaktikanta Das.

Repo Rate Status: Expectations for October Meeting

In the last nine meetings, the RBI has kept the repo rate steady at 6.50% to balance inflation and economic growth. This time, experts are divided on whether the RBI will continue with this approach or signal a shift in policy. Some believe the central bank might maintain the current rate, while others think there could be a change in stance.

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This is the first meeting for three of the six MPC members, who were recently appointed.

When and Where to Watch the Announcement

The RBI Governor will announce the committee’s decision at 10 a.m. on October 9, followed by a press conference at noon. You can watch both events live on RBI’s YouTube channel, Facebook, and X (formerly known as Twitter).

Factors Influencing the Decision

Several issues are expected to be considered, including inflation rates for food and fuel, global uncertainties like rising oil prices, and the ongoing tensions in the Middle East. These factors could influence whether the RBI changes its current approach or keeps things unchanged.

Many believe the RBI will hold off on any major changes for now but may signal future rate cuts.

Economists’ Predictions

According to a Mint poll, nine out of ten economists expect the RBI to cut the repo rate by 25 basis points, but not until December. For this week’s meeting, they predict that the rate will stay at 6.50% for the tenth time in a row.

Economists are split on whether the RBI will keep its current policy stance of “withdrawal of accommodation” or move to a more neutral stance.

Expert Opinions

Madan Sabnavis, Chief Economist at Bank of Baroda, believes there will be no change in the repo rate or policy stance, mainly because inflation is expected to stay above 5% in September and October. He also mentioned that the recent conflict between Iran and Israel adds uncertainty, making it likely that the RBI will maintain its current policy.

Aditi Nayar, Chief Economist at ICRA, thinks the RBI might shift to a neutral stance in the October meeting, followed by small rate cuts in December and February. She also highlighted that the monsoon has been good, which could help reduce inflation related to crops.

HSBC also predicts that the RBI will change its policy stance in the upcoming meeting and start reducing the repo rate by 25 basis points in December and February.

New Members of the MPC

Earlier this month, the Indian government appointed three new members to the MPC: economist Saugata Bhattacharya, Dr. Nagesh Kumar, and Professor Ram Singh. These members replaced Shashanka Bhide, Ashima Goyal, and Jayanth R. Varma. The remaining members of the committee are RBI Governor Shaktikanta Das, Rajiv Ranjan (Executive Director), and Michael Debabrata Patra (Deputy Governor).

With these new members on board, their views and contributions will be closely watched in shaping the RBI’s next moves.