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RBI Governor Shaktikanta Das would unveil the decision of the six-member MPC (Monetary Policy Committee) today on December 8.

Repo Rate Journey So Far

RBI left the benchmark policy rate (repo) unchanged in its past four bi-monthly monetary policies. It had last increased the repo rate in February to 6.5 per cent, thus ending the interest rate hike cycle which began in May 2022 in the aftermath of Russia-Ukraine war and subsequent disruptions in the global supply chain resulting in high inflation in the country.

According to Deutsche Bank Research, RBI will likely increase the 2023-24 GDP forecast to 6.8 per cent year-on-year, from 6.5 per cent earlier, while holding the CPI forecast unchanged at 5.4 per cent.

Inflation

The government has mandated the central government to ensure that the retail inflation based on the Consumer Price Index (CPI) stays at 4 per cent, with a margin of 2 per cent on either side.

Retail inflation eased to a four-month low of 4.87 per cent in October, mainly due to cooling prices of food items. The Reserve Bank’s MPC, in its October meeting, projected CPI inflation at 5.4 per cent for 2023-24, a moderation from 6.7 per cent in 2022-23.

The MPC comprises three external members and three officials of RBI. The external members on the panel are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma. Besides Governor Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).