RBI MPC meeting outcome today: Repo rate, stance and GDP target – Here’s what to look out for

The Reserve Bank of India’s (RBI) monetary policy committee will conclude its bi-monthly review meeting today, April 5. The six-member rate-setting panel, led by RBI governor Shaktikanta Das initiated the meeting on Wednesday April 3, and is all set to announce key decisions on interest rates, monetary policy stance and principal targets for economic indicators.

What to look out for from the RBI MPC meeting outcome?

1. Repo Rate

The current repo rate stands at 6.50%. It has remained unchanged over the last six policy review meetings, with the last upward revision made in February 2023. The rate was raised by 25 basis points to rein in inflation.

Notably, Repo rate refers to the rate at which commercial banks avail short term loans from the central bank of the country. It is a monetary tool through which a central bank controls the money supply in the economy to manage inflation.

Experts do not expect any rate cuts from the meeting that will conclude today. The expectations are in line with RBI Governor Shaktikanta Das’s comments from the February 2024 MPC meeting, where he said “Monetary policy must remain vigilant and not assume that our job on the inflation front is over. We must remain committed to successfully navigating the ‘last mile’ of disinflation which can be sticky.''

2. Monetary Policy Stance

Market watchers and experts are also going to look out for the stance the MPC takes while navigating monetary policy. The review panel currently holds a “withdrawal of accommodation” stance which basically refers to a curtailed monetary policy, wherein money supply is tightened to control inflation.

India’s consumer price index (CPI) eased to 5.09% in February 2024 from 5.10% in January 2024. The RBI’s medium-term target for inflation stands at 4%.The review panel might also reduce its inflation target further as fuel and cooking gas price ease.

3. GDP Target

In its last MPC meeting, held in February, the panel projected GDP growth of 7% for FY25. Experts are looking out for further tweaks in the target, given the country logged a robust growth, an 8.4% increase in GDP, in the third quarter of FY24.

This will be the first meeting of the financial year 2024-2025, and will set a framework for banks to adopt for the remainder of the new financial year. Although, reports suggest that experts forecast rate cuts from the third quarter of financial year 2025, it will be interesting to see what the committee says on impact of global macroeconomic winds on the Indian economy’s growth trajectory and inflation trends.