Topic 1: MPC REPO RATE: A MYSTERY BOX

On 6th April 2023, MPC in its first Bi-monthly meeting monetary policy review for FY2024, takes the U-turn from hike in repo rate, it was kept unchanged at 6.50%. It was a mystery pause after the six consecutive of continuous rate hikes. The RBI lowered its inflation projection for FY24 to 5.2% from 5.3% in its Feb2023 policy. Real GDP growth for FY24 is projected at 6.5%. According to MPC's latest policy meeting minutes, MPC would prefer to observe how past rate moves have affected inflation and wait until there has been some easing in order to justify a general pause in policy rates. The main focus of the MPC meeting, analysing the risks associated with the inflation predictions, anticipating the rate cycle would take some time to reverse. The International Monetary Fund (IMF) revised its current fiscal year GDP prediction for India downward by 20 basis points to 5.9% and FY25 to 6.3%. Even though India's economy is still one of the fastest growing in the world. Moreover, the MPC has also kept the door open to reverse its stance in the next meeting, if necessary to curb the inflation numbers. RBI’s Central board is keeping a close watch on the global and domestic economic situation, as well as the associated challenges, including the impact of current global geopolitical developments