The first Monetary Policy Committee (MPC) meeting of the fiscal year 2023-24 has concluded with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ address. While the central bank’s decision to keep the key interest rate, repo rate unchanged at 6.50 per cent has surprised many, the RBI has also clarified that the pause in rate hike is only for this time.
The decision to keep the repo rate unchanged has been unanimous by all members of the MPC – Dr. Shashanka Bhide, Dr. Ashima Goyal, Prof. Jayanth, R. Varma, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Governor Shaktikanta Das.
During the address, RBI Governor Das said, “The year 2023 began on a promising note.....Inflation globally has moderated but its dissent to the target is proving to be long.... Our war against inflation has to continue.... We are keeping a close watch on the banking sector turmoil in some countries.”
As the management of inflation and growth becomes imperative for RBI, here are the key takeaways from RBI Governor’s speech at the end of April’s monetary policy meeting.
RBI MPC 2023 – Key Highlights of Governor Shaktikanta Das’ address
In response to the central bank’s decision of keeping the repo rate unchanged, Dr Niranjan Hiranandani, Vice Chairman , NAREDCO National said, “In contrast to the World Bank, India Inc. applauds the RBI's decision to pause the rate hike cycle. This act of relief will restore confidence in homebuyers’ sentiment and boost demand rally in the real estate. The industry body now calls for fiscal intervention from the Government of India to cool the inflationary heat caused by persistent geopolitical turbulence caused by the collapse of foreign banks, supply chain challenges, and global financial instability.”
Relaying similar sentiments of appreciation, Nilesh Shah, MD, Kotak Mahindra AMC said, “The RBI’s pause is like Sachin’s stroke on a tricky pitch but with eyes set on having the luxury of hitting the ball where ever he wanted....The market expects the RBI to fetch maximum run and win the match on inflation and growth, no matter which direction they hit the ball.”