- Yes
- No
- Unsure
For the uninitiated, the RBI Monetary Policy Committee (MPC) holds a meeting every 2 months. One of which is going on now.
What’s the purpose?
The main objective of RBI is to ensure price stability and growth while ensuring that the banking system functions as intended. It tries to meet these objectives by controlling the interest rate (repo rate) in the economy.
The Reserve Bank of India has formulated a policy related to the country’s monetary affairs. The policy comprises measures to regulate the supply of money, cost of credit, borrowing & lending rates, etc. This is called the RBI monetary policy.
We have written about “meetings” extensively on @subtextzerodha : It's the economy, stupid: Monetary policy, China and more – Z-Connect by Zerodha
Here’s a look at the Repo Rate in the last couple of years
In case, you are wondering about why the talk of a rate cut in the current meeting itself all of a sudden?
Other key central banks across the world have either starting talking about the rate cut like the Fed or starting cutting the rates like the ECB and Bank of Canada mainly owing a decent fall in prices like oil and inflation expectations going down in the coming months: https://www.reuters.com/markets/rates-bonds/bank-canada-cuts-rates-first-time-four-years-2024-06-05/
With retail inflation hovering around the range of 5% in last 7 months in India and with rising expectations of lower inflation going forward, the possibility of a rate cut from RBI seems bright. Lets see what the MPC decides !