RBI Monetary Policy LIVE Updates: Shaktikanta Das To Announce Monetary Policy At 10 AM Today

Headline inflation has eased in the recent months. At 5.09 percent in February, inflation stayed largely unchanged from 5.1 per cent in the previous month.

Core inflation eased to 3.3 per cent. Core inflation refers to the non-food, non-oil part of inflation, a key measure of price trends used for policy formulation.

The overall inflation print is, however, yet to align with the central bank’s 4 per cent target.

Earlier, RBI announced it will distribute an unprecedented dividend of Rs 2.1 lakh crore for FY24, surpassing the amount the government had initially planned for by over twice the expected sum. This significant increase in surplus is attributed to the RBI’s exceptional interest earnings from its foreign investments. Aditi Nayar, chief economist at the rating agency Icra, noted that this substantial transfer from the central bank will expand New Delhi’s financial capacity in FY25. This could lead to either increased spending or a more rigorous fiscal consolidation than what was outlined in the budget approved in February, ahead of the elections.

The Reserve Bank of India (RBI) Governor Shaktikanta Das is set to announce the second bi-monthly monetary policy of the financial year 2024-25 on Friday. The RBI Governor headed six-member Monetary Policy Committee (MPC) began its three-day meeting on June 5 and the decision is due on Friday, June 7.

Read More: When and How to Watch Shaktikanta Das Address on June 7

A majority of experts said that the central bank will maintain its ‘withdrawal of accommodation’ stance.

However, two economists said it will be changed to `neutral.’

We recently saw India’s rating outlook changing to “positive” from “neutral” by the S&P although the sovereign credit rating has remained unchanged at BBB-.

This indicates policy stability, an increase in investment and long-term growth prospects.

S&P hinted at a rating upgrade by mentioning that it will keep a check on government policies for the next two years by focusing on India’s fiscal deficit reduction target.

Today’s RBI announcement follows closely on the heels of BJP’s loss of clear majority, compelling it to form a coalition government. Analysts caution against the possibility of a BJP-led administration deviating from its fiscal trajectory by increasing welfare expenditure to bolster its popularity. Such a strategy could exacerbate inflation, which already surpasses the RBI’s desired level.

A vegetarian thali became costlier by 9 per cent year-on-year (YoY) in May 2024 mainly on account of dearer tomato, potato and onion due to low base effect and lower crop arrivals. However, the cost of non-veg thali in May 2024 declined 7 per cent YoY due to a fall in broiler prices, according to the monthly ‘Roti Rice Rate’ report released by Crisil’s ‘Market Intelligence and Analysis’ on Wednesday.

Read More: Veg Thali Becomes Costlier By 9% in May 2024, Non-Veg Cheaper By 7%: Crisil

Experts believe that the RBI will keep interest rates unchanged due to ongoing concerns about inflation.

India’s retail inflation eased marginally to hit an 11-month low of 4.83 percent on an annual basis in April as compared to 4.85 percent in the previous month.

The number has remained within the Reserve Bank of India’s (RBI) tolerance band of 2-6 per cent

However, in its past few commentaries, the RBI has maintained that its target is to get headline inflation below 4 percent on a durable basis.

Since February 2023, the Reserve Bank of India has maintained the key interest rate (repo) at 6.5 per cent.

The Monetary Policy Committee (MPC) comprises three individuals from outside the Reserve Bank of India (RBI) and three RBI officials. Serving as external members on this panel are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma.

The election results, which did not throw up a clear mandate for any party, are unlikely to have any bearing on the stance of the Monetary Policy Committee (MPC), as the MPC’s decisions are based on domestic and global economic conditions, experts said.

“As of now, the new political equation doesn’t change anything much for the RBI (Reserve Bank of India) in the immediate run, as the political dust is yet to fully settle. The RBI is unlikely to change its view on broad macro contours on account of this,” said Madhavi Arora, Lead Economist, Emkay Global Financial Services.

Reserve Bank Governor Shaktikanta Das is set to reveal the upcoming monetary policy decisions on Friday morning, with many anticipating that the benchmark interest rates will remain unchanged.