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6.83% in August 2023. This is however significantly lower as compared with 7.44% in July.
Experts said the central bank will likely maintain a precautionary stance because of the inflationary pressure arising from external factors such as rising crude prices and the Indian currency, which is at an all-time low.
In the previous monetary policy review in August, the RBI MPC had kept the repo rate unchanged at 6.5 per cent. This was the third time in a row that the central bank paused the key interest rates.
The RBI Governor-headed six-member Monetary Policy Committee (MPC) began its deliberations on October 4 and is scheduled to announce the bi-monthly monetary policy review on Friday.
The Reserve Bank has been mandated by the government to ensure the Consumer Price Index (CPI) based retail inflation remains at 4 per cent, with a margin of 2 per cent on either side. The retail inflation was 6.83 per cent in August, above the RBI’s comfort level. In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points, and it was followed by rate hikes of varying sizes, in each of the five subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.
The MPC consists of three external members and three officials of the RBI. The external members of the panel are Shashanka Bhide, Ashima Goyal, and Jayanth R. Varma. Besides Governor Shaktikanta Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).
