RBI Monetary Policy: Rate pause may continue on GDP print, CPI inflation; Key indicators to watch

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RBI) Governor Shaktikanta Das will unveil the fifth monetary policy of the financial year 2023-24 on Friday, December 8, after a two-day review, as it observes the impact of global headwinds on India's macroeconomic indicators such as inflation trajectory and growth in gross domestic product (GDP). The review by the six-member Monetary Policy Committee (MPC) led by Das will likely indicate the course RBI will adopt in the remainder of the financial year as it seeks to strike a fine balance between sustaining growth and bringing inflation under the 4 per cent target amid high food prices.

Also Read: RBI likely to continue with hawkish stance after Q2 GDP shoots above estimates; Here's what experts say According to the majority of economists on D-Street, the RBI would keep its key repo rate unchanged at 6.50 per cent at the conclusion of the December 6-8 MPC meeting, continuing its hawkish stance. Analysts also do not expect the central bank to change its stance from ‘withdrawal of accommodation’.

However, the recent decline in crude oil prices and bullish economic growth in the July-September quarter are likely to keep the MPC's focus on inflation. ‘’We expect the Reserve Bank of India to remain hawkish at the upcoming policy as growth continues to show strength while inflation risks linger on,'' Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram.

Analysts also say that the central bank may start easing monetary policy in the second half of 2024. "An economy on fire, and the persistent food inflation threat, suggest to us that the RBI will be in no hurry to loosen policy," Capital Economics' Thamashi De Silva said.