RBI Monetary Policy - August 2023

In its previous monetary policy meeting the RBI kept interest rates unchanged at 6.5%. With the recent surge in food prices and increase in crude oil prices, will the RBI hike the interest rates again or continue to hold?


What is your expectation?

  • Hike by 25 basis points
  • Hike by 50 basis points
  • Will keep the interest rates as it is

0 voters

RBI has a target inflation rate of 4% with a leeway of 2% on either side.

I think the current spike in tomato prices is transitory. The real rates are positive, and I don’t see any reason to hike today. The commentary will be important.

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Concur with Suyash here. But there’s pressure from other central banks due to narrower interest rate differential.

RBI keeps the rates unchanged. :saluting_face::saluting_face::saluting_face: Das sir

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Everybody were prepared for rate hike - Incremental CRR came out of the syllabus :smile:

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Some highlights from the policy:

On the domestic economy;

“Domestic economic activity is maintaining resilience.”

  • As of August 9, rainfall was the long-period average. However, distribution has been uneven.
  • Total area sown under Kharif crops was 0.4% higher than a year ago as of August 4, 2023.

IIP and PMI data

  • Industrial production (IIP) expanded by 5.2% in May. Core industries output rose by 8.2% in June.
  • Composite Purchasing Managers Index (PMI) rose to a 13-year high in July.

Inflation outlook

  • RBI revised its inflation forecast for FY24 to 5.4%.

  • “The spike in vegetable prices, led by tomatoes, would exert sizeable upside pressures on the near-term headline inflation trajectory.”

  • Inflation in Q2 projected at 6.2%, Q3 at 5.7%, and Q4 at 5.2%.

GDP growth projections

Coming to GDP growth, the RBI maintained projections for FY24 at 6.5%. With growth in Q1 at 8%, Q2 at 6.5%, Q3 at 6%, and Q4 at 5.7%.

On the global economy:

  • “The global economy is slowing and growth trajectories are diverging across regions amidst moderating but above target inflation, tight financial conditions, simmering geopolitical conflicts, and geoeconomic fragmentation.”

  • “For several emerging market economies, weak external demand, elevated debt levels and tight external funding conditions pose risks to their growth prospects.”

Here’s the full statement :


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GDP = Repo Rate = 6.5%

Next exam, will use this logic to guess the new Repo Rate :stuck_out_tongue_winking_eye: :stuck_out_tongue_winking_eye: :stuck_out_tongue_winking_eye: