No rate change for 10 meetings in a row
The RBI has kept its policy rate at 6.5% for ten consecutive meetings, signaling a cautious stance on inflation. Food inflation remains a pressing issue, with stabilization efforts yet to yield significant results. However, optimism persists due to a good monsoon season and hopes for a revival in capital expenditure, which are expected to support growth.
Inflation remains a concern
RBI Governor Shaktikanta Das has maintained his focus on inflation, ruling out immediate rate cuts despite the central bank’s neutral policy outlook in October. Inflation remains above the 4% target, making any relaxation in monetary policy unlikely. However, the sharper-than-expected dip in GDP growth to 5.4% in the July-September quarter has raised concerns that restrictive policies might be hindering economic activity.
Calls for lower borrowing costs grow
Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal have both pushed for reduced borrowing costs to stimulate growth. Economists are also advocating for measures to encourage lending and invigorate the economy. The MPC is under pressure to address the dual challenge of high inflation and faltering growth.
Governor Das’ term adds to speculation
Shaktikanta Das, whose six-year term as RBI Governor ends on December 10, is under the spotlight. With no confirmation yet on whether he will receive an extension or a successor will take over, speculation abounds. Back in 2021, Das’ extension was announced over a month in advance, adding intrigue to this delay.
Press conference to address key questions
Today’s press conference is expected to be packed with questions about the MPC’s decisions and the leadership transition. If no clarity is provided about Das’ future role, it could become a focal point of the discussion, along with strategies for tackling inflation and boosting economic growth.