RBI MPC Meeting: RBI Governor will announce monetary policy on December 8, no change in repo rate.

RBI MPC Meeting: On Friday, December 8, 2023, the Reserve Bank of India will announce the decision taken after the meeting of the Monetary Policy Committee for the fifth time in the financial year 2023-24. RBI Governor Shaktikanta Das will announce the decisions taken in the MPC meeting at 10 am. And there are full chances that this time too RBI will not make any changes in its policy rates. 

There has been no change in the policy rate i.e. repo rate in all the monetary policies announced by RBI since February 2023. Now the question arises what will happen on 8th December? So the economists of State Bank of India have said in their report that RBI will not make any cut in its benchmark repo rate before the second quarter of 2024-25, which is currently at 6.5 percent. The report says that the repo rate will remain stable at 6.50 percent and there is no possibility of any change in it before June 2024. 

The biggest relief for the RBI Governor is that crude oil in the international market has fallen below the 5-month low of $75 per barrel. If the prices of crude oil remain at these levels, then in the coming days the government may take a decision to reduce the prices of petrol and diesel, after which inflation will come down further. With fuel becoming cheaper, freight transportation will become cheaper, which is bound to impact the prices of goods.  

While announcing the monetary policy in October 2023, the RBI Governor has estimated the retail inflation rate to be 5.4 percent in 2023-24. In which it is expected to be 5.6 percent in the third quarter and 5.2 percent during the fourth quarter from January to March. Prices of food items are falling and if fuel becomes cheaper, things will become cheaper. If this happens, the inflation rate will come down in the coming days. Retail inflation has come down to 4.87 percent in October 2023, which had reached a 15-month high of 7.44 percent in July. 

After the retail inflation rate reaches 4 percent, the pressure on RBI to change the policy rates may increase. Anyway, there are indications that the Federal Reserve in America may cut interest rates in March 2024. After which there will be pressure on RBI to reduce interest rates. In fact, after May 2022, six RBIs had increased the repo rate from 4 percent to 6.50 percent after the sharp rise in retail inflation rate, due to which the loan had become expensive. 

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