RBI Monetary Policy Meeting 2024 Highlights: “Increasing geo-political tensions are leading to supply chain disruptions and price volatility in key commodities, especially crude oil,” said Das.
RBI Monetary Policy Committee Meeting Highlights: The RBI’s Monetary Policy announced its decision on February 8 keeping the repo rate remain unchanged at 6.5 per cent after having raised it by 250 basis points between May 2022 and February 2023. RBI Governor Shaktikanta Das said “India’s potential growth is propelled by structural drivers.” He also mentioned that increasing geopolitical tension impacting supply chain and putting pressure on commodity prices especially crude oil.
Ranen Banerjee
Partner and Leader Economic Advisory, PwC India
The MPC’s decision to keep the policy rate unchanged was expected. The stance is also kept at withdrawal of accommodation that possibly is a surprise. This possibly is explained by the fiscal consolidation with Government projecting a lower deficit than target in FY24 and an aggressive 5.1% deficit target for FY25. The lower government borrowings and higher international money allocations to India bonds owing to inclusion of India in the JP Morgan Emerging Markets bond index will keep a downward bias on the yields. The growth momentum is also holding up and inflationary risks are still on the horizon. The MPC therefore has decided to conserve its rate and stance gunpowder at this stage.
Anil Rego
Founder and Fund Manager at Right Horizons
In December 2023, the annual retail price inflation in India increased to 5.7%, as opposed to the 4.9% recorded in October. Headline inflation is still impacted by food price uncertainty. The MPC is still committed to keeping inflation within the 4 percent target range.
The Gross Domestic Product (GDP) increased by 7.3%, marking the third successive year in a row. The Monetary Policy Committee has maintained the status quo on the repo rate as inflation moderates in a resilient growing economy.
Since inflation is moderating, economic activity is steady and oil prices are lower and India is poised to be the growth engine for the global economy the markets were expecting the repo rate to be unchanged at 6.5%. We believe markets in the near term will now be driven by upcoming earnings season and 2024 elections.
Markets have touched new highs, especially with earnings for the Q3FY24 coming healthy supporting the trajectory. Investors are bullish as they are favouring rate cuts in 2024 which will unanimously boost the equity markets. The banking sector is the most sensitive to changes in rate cycles and has been a major reason for incremental earnings in FY23 and in H1 of FY24 benefitting from the hikes and credit growth being robust and persistent. Prolonged rate cuts will eventually lead to narrowing NIM but we expect rate cuts to begin in the last quarter and hence the trend in the banking sector is likely to continue in FY24. NBFCs will be best positioned to benefit from cuts in rates as credit growth will improve followed by banks. Also, credit-sensitive sectors like auto and real estate will see higher demand.
Refrence Link:- https://www.financialexpress.com/market/rbi-monetary-policy-meet-check-date-time-what-to-expect-when-and-where-to-watch-3387476/