RBI's MPC meeting begins today, all eyes on central bank action on rising inflation
RBI's Monetary Policy Meeting Begins Amid Economic Challenges
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has started its meeting in Mumbai to decide the country's policy rate. This important meeting, led by RBI Governor Shaktikanta Das, will last from December 4 to December 6, with the policy decisions being announced on December 6.
The meeting is happening at a time when the economy is facing big challenges like lower GDP growth, high inflation, and decreasing production levels. These issues have caused public worry. Ashok Gulati, an Indian agricultural economist and professor at the Indian Council for Research on International Economic Relations (ICRIER), mentioned that the rising prices of vegetables are beyond the RBI's control. He also pointed out that the GDP growth for the second quarter suggests that the RBI might be slow in changing its policies, like reducing the repo rate. However, he believes it's not too late for the RBI to make necessary changes now.
In the last MPC meeting in October, the RBI kept the policy repo rate at 6.5% for the 10th time in a row. The decision was made with a majority vote of 5 out of 6 members. The standing deposit facility (SDF) rate stayed at 6.25%, and the marginal standing facility (MSF) rate and the bank rate remained at 6.75%.
Official data showed that retail inflation rose to 6.21% in October, going over the RBI's upper limit of 6%. The Ministry of Statistics and Programme Implementation reported food inflation at 10.87%, with vegetable inflation reaching 42.18%. Rural inflation was 6.68%, while urban inflation was lower at 5.62%. The economy grew by 5.4% in real terms during the July-September quarter of the 2024-25 financial year, which was less than the RBI's forecast of 7%. These numbers show the need for the MPC to carefully consider policy actions to manage inflation and boost economic growth in the future.
Doubts Revealed
RBI
RBI stands for the Reserve Bank of India. It is the central bank of India, which means it manages the country's money and financial system.
Monetary Policy Committee
The Monetary Policy Committee is a group of people in the RBI who decide on important things like interest rates to help control the economy.
Policy rate
The policy rate is the interest rate set by the RBI that influences how much it costs to borrow money in the country.
GDP growth
GDP growth refers to how much the economy is growing. GDP stands for Gross Domestic Product, which is the total value of all goods and services produced in a country.
Inflation
Inflation is when prices of goods and services go up, meaning you need more money to buy the same things.
Governor Shaktikanta Das
Shaktikanta Das is the person in charge of the RBI, like a principal of a school, but for the bank.
Repo rate
The repo rate is the rate at which the RBI lends money to other banks. It helps control inflation and the economy.
Retail inflation
Retail inflation is the increase in prices of goods and services that people buy in stores.
Food inflation
Food inflation is when the prices of food items go up, making it more expensive to buy food.
Economist Ashok Gulati
Ashok Gulati is an expert who studies the economy and gives advice on how to improve it.
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