RBI Unlikely to change the existing financial policies in the upcoming MPC.

The Reserve bank of India (RBI)’s Monetary Policy Committee (MPC) is also expected to address other important concerns apart from updating the growth forecasts.

The RBI governor, Shaktikanta Das is scheduled to chair a two-day meeting of the bi-monthly Monetary Policy Committee (MPC) from the 2nd of December. The RBI is expected to retain the existing lines of policies that it has been maintaining for the past three committee meetings on a trot. This comes in the backdrop of the release of the recent statistics of economic progress of the country by the Indian statistics agency that showed the negative growth of GDP for a second consecutive quarter at -7.35%, accentuates the importance of this particular meeting.

As far as the repo rate (the rate at which banks borrow from the central bank) they are bound to be the same at an aggregated 250 basis points, this, as it is also expected to forecast an exponential increase in retail inflation, as expressed by many. The rise in the inflation rate, at 7.36%, which has been following an upward graph for nine months is largely attributed to multiple sectors that continued to be strained, this primarily as the recovery of economic activities in the country that followed a series disruptive lockdown, has been rather sluggish.

Despite all the grim, the economic growth, in accordance to GDP (-7.35%) number has been marginally better than its prediction of -9.5 % for the second quarter, announced in the previous MPC meeting. Apart from, thanks to some slow baby steps of progress made in certain sectors, RBI doesn’t think there would be a need to reduce the interest rate.

The two-day-long meeting, which is supposed to come out with announcements and economic guidelines on the 4th of December is expected to raise the retail inflation, also due to other factors like, an increase in fuel prices, as the country has now officially entered a technical recession, due to two consistent quarters (April-June and July-September) with a negative overall growth.



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