RBI MPC to Announce Policy Rate Decision Today; Here's What to Expect

All eyes will be on the Reserve Bank of India (RBI) on Friday as its Monetary Policy Committee (MPC) led by governor Shaktikanta Das announces its decision on the repo rate after concluding the three-day monetary policy meeting.

RBI has announced that it will release the Fourth Bi-monthly Monetary Policy Statement for 2019-20, along with the resolution of the MPC on policy rates, at 11.45 am on Friday.

The central bank is widely expected to cut repo rate today, for a fifth time this year, to support the government’s fiscal stimulus measures to revive economic growth which hit a six-year low of 5% during the June 2019 quarter. For those unaware, RBI has already cut repo rate four times consecutively this year amounting to 110 basis points in aggregate. The Monetary Policy Committee at its last meeting in August had reduced the repo rate by 35 basis points to 5.4%.

After announcing the policy rate decision, RBI’s top management will then hold a press conference to talk further about the decisions taken in the meeting. The interaction will be held from 12 noon to 12.45 pm and will be live webcast on rbi.org.in.

In the current scenario, apart from policy rate, RBI’s commentary on cooperative banks, the ongoing NBFC (non-banking financial company) crisis and health of India’s banking sector will also be keenly watched by analysts.

Given the recent PMC Bank crisis, RBI is expected to tweak some regulatory norms for cooperative banks in order to make them more stable. Also, in light of the recent developments at Yes Bank, it would be interesting to see how the central bank allays concerns around the state of Indian lenders that has been pulling down banking stocks over the past few days.

RBI’s projections for India’s economic growth will also be important, especially after the government announced a cut in corporate tax rates last month. In the August credit policy, the MPC had said it expected India’s GDP to grow 6.9% in 2019-2020.