Date and Time of Meeting:
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) convened for its first policy meeting of the fiscal year 2024-25 from April 3rd to April 5th, 2024. The announcement of the committee's decision was made by RBI Governor Shaktikanta Das on April 5th at 10:00 am.
Overview of the Meeting: The MPC, chaired by RBI Governor Shaktikanta Das, comprises a total of six members. The committee deliberated on the prevailing economic conditions and financial indicators to formulate its monetary policy stance for the upcoming period.
Expectations and Market Analysis: Given the ongoing market fluctuations and the sensitivity of stocks to interest rate changes, analysts anticipated the RBI to maintain the status quo on the repo rate, which has remained at 6.5 percent since February 2023. This expectation was echoed by all 56 economists surveyed in a Reuters poll conducted from March 15th to March 22nd.
The prevailing sentiment among economists aligned with the view of maintaining the repo rate, despite a split regarding the timing of potential rate cuts in 2024. The median predictions suggested a gradual reduction to 6.25 percent by September and six percent by year-end. However, the majority opinion suggested the continuation of the current policy stance.
Previous MPC Meeting (February 2024): In the preceding MPC meeting held in February 2024, the committee opted to maintain the benchmark interest rate at 6.5 percent for the sixth consecutive meeting. This decision was influenced by inflationary concerns and a commitment to gradually withdraw accommodation while supporting growth. The vote resulted in five members favoring the status quo, while one member proposed a 25 basis point reduction in the policy repo rate.
Key Interest Rates: As of the February 2024 meeting, the key interest rates set by the RBI were as follows:
- Repo Rate: 6.5%
- Fixed Reverse Repo Rate: 3.75%
- Bank Rate: 6.75%
- Marginal Standing Facility (MSF) Rate: 6.25%
- Standing Deposit Facility Rate: 6.25%
Conclusion and Market Outlook:
Despite expectations for ongoing market volatility during the MPC meeting, the sentiment remained positive, driven by the performance of indices such as the Nifty 50 and banking index. Traders were advised to focus on large-cap stocks and robust sectors for potential opportunities amid the prevailing market conditions.Future MPC Meetings (FY25): Following the April meeting, the RBI's MPC is scheduled to convene on the following dates in the fiscal year 2024-25:
- June 5-7, 2024
- August 6-8, 2024
- October 7-9, 2024
- December 4-6, 2024
- February 5-7, 2025
Disclaimer: The information provided in this report is based on available data and analysis up to April 2024. It is subject to change based on future economic developments and policy decisions by the Reserve Bank of India.
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