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Published: December 8, 2023
Updated: December 8, 2023

RBI MPC 2023: Anticipated Monetary Policy Update and Economic Projections. What to Expect?

As anticipation builds, RBI Governor Shaktikanta Das is set to unveil the outcome of the December 2023 Monetary Policy Committee (MPC) meeting today at 10:00 am. This article delves into the key expectations and potential shifts in India's monetary policy.

Decisive Moment: RBI's Repo Rate Standoff:

The central focus of this MPC announcement revolves around the repo rate, with expectations leaning towards a status quo. Against the backdrop of inflation within comfort levels and robust economic growth, the Reserve Bank of India is poised to maintain the current policy stance.

Repo Rate Journey: From Hikes to Stability:

Reflecting on the RBI's policy decisions, the repo rate, which witnessed a series of hikes since May 2022 due to global disruptions and inflationary pressures, has remained unchanged at 6.5% since February. The upcoming announcement signifies a potential continuation of this stability, aligning with the Centre's mandate to keep retail inflation within a 4% range.

Economic Outlook: Shifting GDP Projections:

While inflation remains in check, the RBI is expected to reevaluate its GDP forecast for the current fiscal year. Preliminary indications suggest a potential adjustment of 25-30 basis points from the current 6.50%. India's impressive GDP growth of 7.6% in the second quarter of FY2023-24 and 7.8% in the first quarter has set a positive tone, prompting a review of earlier projections.

Inconsistencies in Projection: October's Monetary Policy Review Recap:

A notable point of contention lies in the variance between the RBI's October projection for Q2 real GDP growth (6.5%) and the Ministry of Statistics and Programme Implementation's reported figure (7.6%). This incongruity underscores the dynamic nature of economic forecasts and sets the stage for potential revisions in the upcoming announcement.

As the clock ticks towards Governor Shaktikanta Das's announcement, the markets await confirmation of the anticipated status quo on the repo rate and potential adjustments in GDP projections. The delicate balance between inflation control and economic growth will play a crucial role in shaping the RBI's policy stance.