RBI MPC Meeting 2023: The Reserve Bank of India (RBI's) Monetary Policy Committee (MPC) has concluded on Thursday, June 8. As per the announcement by RBI Governor Shaktikanta Das, the central bank has once again paused the repo rate hike, keeping it unchanged at 6.50 per cent. Das said, "Financial stability concerns continue in advanced economies."
Emphasising on the 'repo rate unchanged stance', RBI Governor Das also clarified that the decision has been taken on the backdrop of managing inflation and growth, like every time. Even last time, in April's bi-monthly policy review, the MPC surprised everyone by keeping the repo rate unchanged.
As far as RBI MPC's stance goes, Governor Das said that the RBI remains watchful of everything while focussing on its stance 'withdrawal of accommodation.' But what happens in the future or in the next MPC address, will again be dependent on several micro and macro-economic factors.
Till date, the RBI MPC has cummulatively hiked the repo rate by 250 bps. However, with easing inflation and Indian economy being relatively insulated from the global economic downturn, the pause in rate hike was expected.
Indranil Pan, Chief Economist, YES Bank said, "There was nothing in the policy that was not expected by the market, rates and the stance both were unchanged. However, the communication, in my opinion, was slightly on the hawkish side with respect to inflation. Even as there was a 10 bps reduction in the inflation forecast for FY24, the governor was extremely pointed in highlighting that the MPC is now focused on getting inflation down to the 4% central line, rather than being comfortable with the fact that headline inflation is currently within the tolerance band and is likely to remain so for the rest of FY24."
Explaining the outcome of RBI MPC 2023, Dr Niranjan Hiranandani, National Vice Chairman, NAREDCO stated, “India Inc hails accommodative stance of RBI with recurrent pause in repo rate hike at 6.50% as record high inflation eases off gradually. As a snowball effect, respite in homeloan interest rate will augur well to fuel uptick in housing sales across the segments. Now, the discerning homebuyers should avail the benefits of cooling inflation, stable home loan rates, conducive real estate market dynamics in the backdrop of buoyancy in GDP growth, domestic demand and availability of sufficient liquidity."
Anant Singhania, President, IMC Chamber of Commerce and Industry said, "Amidst all positive growth outlook of Indian economy like endorsement of resilient Indian economy by multilateral bodies, Q4FY2023 GDP growth above expectations, upbeat gross tax collections, thrust on capex, buoyant forex, inflation tapering, and the rural demand is expected to grow due to expected normal monsoon, the monetary policy was on expected lines."
Abhay Bhutada, MD, Poonawalla Fincorp said, "RBI’s decision of having a regulatory framework for default loss guarantee arrangements is surely in the best interest of NBFCs. This will help reduce the risk factor undertaken while lending. On the other hand, the repo rate being unchanged is beneficial for NBFCs as it leads to the prospect for increase in loan consumption. With a steady rate, customers will be encouraged to opt for loans thus positively impacting business growth."
Achala Jethmalani, Economist, RBL Bank also added, "In a no surprise move, monetary policy maintained a status-quo on policy rates and stance. It remains in a ‘wait & watch’ mode and vigilant on inflation trajectory. We expect a pause on policy rates through CY2023 while modulating system liquidity."