The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) is set to meet this week as part of its bimonthly review. The MPC was reconstituted at the beginning of this month, adding three external members to the panel.
The meeting, scheduled from October 7 to 9, comes at a time when tensions in the Middle East are raising a concern over price of crude oil and commodities as RBI struggles to keep retail inflation under control.
Will RBI cut interest rates?
RBI Governor Shaktikanta Das
The central bank is unlikely to slash the benchmark interest rate and RBI Governor Shaktikanta Das will announce the final decision on October 9.
The RBI has kept the repo rate of 6.5 per cent unaltered in the previous nine consecutive meetings since February 2023. Reports suggest that any chance of easing the rates will happen only by the following meeting that is expected in December.
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This comes despite major economies like the US and China have cut their interest rates. The US Fed Reserve slashed its benchmark rates by 50 basis points, with further cuts expected in coming months. However, the domestic economic trends do not align with the global scenario as inflation risk persists, especially price of vegetables. Though the country witnessed an abundant monsoon, RBI will take a call based on the impact of rainfall and food inflation.
Another reason for the RBI opting to maintain status quo could be the current uncertainty around tensions in the Middle East as Israel and Iran vowed to retaliate ahead of the anniversary of last year's October 7 attacks.
