RBI Monetary Policy June 2024: MPC keeps repo rate unchanged; here is what economists say

RBI Monetary Policy June 2024, RBI Monetary Policy Expert View, RBI Monetary Policy Outcome: As widely expected, the six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI)—which decides and adjusts the key interest rate of the economy—decided to keep the repo rate—the key interest rate at which the RBI lends money to commercial banks—unchanged at 6.5 per cent in its latest bi-monthly monetary policy meeting that was held between June 5-7. The MPC voted 4:2 to maintain the key lending rate. 

Here is what economists say about the June 2024 RBI Monetary Policy Review:

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers:

"Several indications from the governor's speech suggest that the RBI is unlikely to commence rate cuts soon. The upward revision in growth, the expectation of a non-linear disinflationary process, and a clear signal that the RBI will not mirror the Federal Reserve's anticipated monetary policy easing imply that a rate cut in 2024 is improbable."

"However, with two of the six monetary policy committee members advocating for easing, and considering the RBI's expectation of continued falling inflation alongside the current high real interest rates, it appears that the RBI may not maintain the policy rates and liquidity tightening stance for an extended period. Today's policy is neutral for financial markets in the near term, but the medium-term implications are positive for both the equity and debt markets."

Anitha Rangan, Economist, Equirus:

"The key reason for maintaining policy rate is the uncertainty on the outlook of domestic inflation led by the food side. According to RBI while core inflation is encouraging and at the lowest level in the current series, it is the food inflation that is playing spoilt sport, requiring vigilance. In addition, the crude outlook remains uncertain.  A reference was also made that external factors are watched for, to see the impact on domestic inflation." 

"Overall, the Indian economy is at an inflextion point with inflation on the right track but work to be done. The watch is from the global side with global last mile inflation remaining arduous and geo-political risks. For RBI as we have reiterated earlier growth remains firm, and monetary policy has elbow room to focus on price stability.  The growth revision only reiterates that RBI is willing to wait and watch – RBI can watch for longer. RBI has the trinity of patience, perseverance, and poise to support the economy!"

Achala Jethmalani, Economist, RBL Bank: 

"The MPC maintains a cautious pause and the commentary suggests that the MPC’s policy decisions will be determined by domestic growth-inflation dynamics while considering the impact monetary policy outcomes in the advanced economies... Given India’s growth-inflation dynamics, we expect a rate-cut to possibly come through in Q4FY25 with a change in policy stance by December 2024."

"The progress of South West monsoon and the July budget will be critical inputs in the August policy."

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