RBI Calls for Additional Meeting of MPC on 3rd November
Moneylife Digital Team 27 October 2022
The Reserve Bank of India (RBI) has called for an additional meeting of the monetary policy committee (MPC) on 3 November 2022. In May 2022, after an unscheduled rate review meeting, MPC decided to increase repo rate by 40 basis points (bps) to 4.40% with immediate effect. This was done to lower inflation and anchor inflation expectations. 
 
Last month, MPC decided to increase the repo rate by 50bps to 5.90%. Consequently, the standing deposit facility (SDF) rate was adjusted to 5.65% and the marginal standing facility (MSF) rate and the bank rate to 6.15%. MPC also decided by a majority vote to remain focused on withdrawing accommodation to ensure that inflation remains within the target in the future while supporting growth.
 
In MPC's view, inflation is likely to be above the upper tolerance level of 6% through the first three quarters of 2022-23, with core inflation remaining high. It says, "The outlook is fraught with considerable uncertainty, given the volatile geopolitical situation, global financial market volatility and supply disruptions. Meanwhile, domestic economic activity is holding up well and is expected to be buoyant in second half (H2) of FY22-23, supported by festive season demand amidst consumer and business optimism." 
 
MPC is of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, restrain the broadening of price pressures and preempt second-round effects. MPC expected this action to support medium-term growth prospects.
 
In September, the Committee's forecast for consumer price index-based (CPI) inflation was maintained at 6.7% for the current fiscal, as risks from food and core inflation remain. The gross domestic product (GDP) growth forecast for this fiscal was revised downwards to 7.0% (from 7.2% earlier) primarily due to headwinds from tightening global financial conditions and risks to exports, even as domestic activity remains resilient.
 
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