RBI Monetary Policy Live Updates: Governor Shaktikanta Das's Address Shortly On Interest Rate Decision

Watch RBI Governor Shaktikanta Das address the press conference in Mumbai where he will announce the decision of the MPC on interest rate.

The RBI MPC committee had first raised rates by 40 basis points at an unscheduled meeting in May last year, followed by 50 basis points each in June, August and September. It raised rates by a further 35 basis points in December last year, followed by a hike of 25 basis points in February this year.

Only three of the 13 economists polled by Bloomberg expect the MPC to cut the repo rate by 25 basis points, with the remaining expecting a status quo for the tenth straight meeting. The benchmark lending rate is at 6.5%.

The first cut and change in stance is likely in December 2024 or February 2025, according to Soumya Kanti Ghosh, chief economic advisor at the State Bank of India. "We, however, believe a possibility of growth slowing down incrementally with the leading indicators showing a declining momentum and increasing geopolitical risk might prompt a rewording of communication from RBI highlighting the need to have a balanced growth inflation balance," he added.

The NSE Nifty 50 and BSE Sensex opened higher on Wednesday ahead of the Reserve Bank of India's monetary policy announcement. Infosys Ltd. and State Bank of India led the gains in the indices.

As of 9:17 a.m., the Nifty 50 was up 0.19% at 25,058.45, while the Sensex rose 0.21% to 81,82.39.

Follow live market action here.

The yield yield on the 10-year bond opened flat at 6.80%, ahead of the RBI Monetary Policy Committee decision on the repo rate. It closed at 6.79% on Tuesday.

Source: Bloomberg

The Indian rupee strengthened by 4 paise to open 83.92 against the US dollar. It closed at 83.96 on Tuesday.

Source: Bloomberg

According to RBI's money market data, the banking system currently has a liquidity surplus of approximately Rs 1.57 lakh crore. After experiencing a prolonged deficit, liquidity has remained in surplus for the past two to three months, leading the RBI to employ variable rate reverse repo (VRRR) auctions to manage the excess.

India's benchmark equity indices snapped their six-session losing streak to end higher on Tuesday, led by heavyweights HDFC Bank Ltd., Infosys Ltd., and Reliance Industries Ltd. They ended higher even as most global markets fell, and investors now await the outcome of the monetary policy committee meeting due on Wednesday.

The Nifty 50 closed 0.88%, or 217.40 points, higher at 25013.15, and the Sensex gained 0.72%, or 584.81 points, to end at 81634.81. Intraday, both the indices gained 1% and 0.88%, respectively.

RBI Governor Shaktikanta Das is set to announce the decision of the six-member Monetary Policy Committee on Wednesday, October 9, at 10:00 a.m.

Retail inflation rose to 3.65% in August, compared to 3.54% in July. In July, the inflation was the lowest in nearly five-years. Despite the uptick in August, it remains within the central bank's target of 4% aided by the base effect.

Food inflation is likely to remain elevated. Prices of key vegetables, such as onions and tomatoes, climbed in September, according to high frequency data by the Department of Consumer Affairs, as several parts of the country saw crop damages amid excessive rains.

CPI is expected to remain below 5% in the remaining months, except for September because of unfavourable base effect, Ghosh said. "However, for the full year FY25, CPI inflation is likely to average to 4.5%-4.6% and will remain In the RBI’s targeted range of 4-6%."

The next RBI Monetary Policy Committee meetings for financial year 2024-25 will be held on the following dates:

• Dec. 4-6, 2024

• Feb. 5-7, 2025

The central bank holds six bi-monthly meetings annually. Previous meetings in this financial year took place in April, June, and August.

India's Monetary Policy Committee in its August meeting decided to keep the benchmark repo rate unchanged but was ready to act as and when needed, amid sticky inflation at home and banking crisis elsewhere.

Key takeaways from RBI Governor Shaktikanta Das' speech:

• The decision to keep the repo rate unchanged at 6.5% was unanimous.

• The standing deposit facility rate pegged 25 bps below the repo rate, is at 6.25%.

• The marginal standing facility rate, which is 25 bps above the repo rate, is at 6.75%.

The committee had first raised rates by 40 basis points at an unscheduled meeting in May last year, followed by 50 basis points each in June, August and September. It raised rates by a further 35 basis points in December last year, followed by a hike of 25 basis points in February this year.

The MPC decided with 5:1 majority to remain focused on the withdrawal of accommodation, Das said.

On Oct. 1, the government appointed three new external members, including Ram Singh, Saugata Bhattacharya, and Nagesh Kumar, to the Reserve Bank of India’s monetary policy committee. These new members are replacing Mumbai professor Ashima Goyal, IIM-Ahmedabad professor Jayanth Varma, and New Delhi senior adviser Shashanka Bhide, whose tenure ends on Friday. The other members of the committee include Governor Shaktikanta Das, Deputy Governor Michael Patra, and Executive Director Rajiv Ranjan.

Also Read: All You Need To Know About The New External Members of RBI MPC

The Reserve Bank of India is expected to maintain the current benchmark interest rate during this Monetary Policy Committee meeting.

Only three of the 13 economists polled by Bloomberg expect the MPC to cut the repo rate by 25 basis points, with the remaining expecting a status quo for the tenth straight meeting. The benchmark lending rate is at 6.5%.

According to Soumya Kanti Ghosh, chief economic advisor at the State Bank of India, the first cut and change in stance is likely in December 2024 or February 2025,

However, Nomura stated that it expects the October meeting to mark the start of monetary policy inflection.

The last hike in the repo rate happened in February 2023 when it was increased to 6.5%, and since then, it has remained unchanged in the subsequent nine bi-monthly monetary policy reviews.

Read full story here.

The Monetary Policy Committee or MPC of the Reserve Bank of India chaired by Governor Shaktikanta Das began its 3-day MPC meeting on Monday, Oct. 7, to discuss the fourth bi-monthly monetary policy for the fiscal year 2024-25. Key areas of the decision making process included interest rates, inflation, growth outlook and oil prices.

Das will announce the decision of the six-member MPC at 10:00 a.m.