RBI Monetary Policy Meeting August Live Updates: MPC to Keep Rates Unchanged

The MPC meeting is constituted under the Reserve Bank of India Act, 1934 as an initiative to keep all the actions with transparency and accountability in regard to fixing all the Monetary Policy of India. MPC organises meetings at least 4 times annually and each & every time the monetary policy gets published after meeting with opinions of each member. The MPC meeting is headed by RBI Governor Shaktikant Das, and constituted by the central government. 

The meeting was scheduled consecutively for three days, from August 8 to August 10. The RBI Monetary Policy Committee of the RBI consists of six members. In the MPC meeting, RBI kept the repo rate unchanged at 6.5% on August 10 and it is observed that since May 2022, the central bank has hiked the repo rate by approximately 250 basis points or BPS.

What is BPS or Basis Points?

In finance, basis points, BPS, or “bips” are a unit to measure that demonstrates the percentage change in the value of financial assets or the change rate in an index or other benchmark. For instance; value of a one basis point is equal to 0.01% (1/100th of a percent) or 0.0001 in decimal.

What is Repo Rate?

Repo Rate is the abbreviation of “Repurchase Agreement or Repurchasing option”. A Repo Rate is the interest rate on which RBI provides loans to all the commercial banks. 

In the last meeting of MPC held on June 8th, RBI governor Shaktikanta Das, stated that “there is no room for complacency”. He had also stated that, however, close and continued observation on the increase in inflation is significant and the impact of EI nino remained fickle.   

In June, Retail Inflation based on CPI (Consumer Price Index) increased to a three-month high of 4.81 percent, especially on higher food prices so, RBI’s comfort level is below 6 percent. If there are any flash flood impacts in inflation data for July, then it will be shown on August 14.

Conclusion:

As we can see, it’s the 3rd bi-monthly MPC meeting in which the RBI kept the Repo Rate unchanged at 6.50% or 6.5%. The decision is totally in favour of a businessman and a common man because it might help them if they are in condition to avail themselves a loan from the banks. Inflation took place in the month end of July, so it was indeed important for the middle class as well as for the lower class whereas it is a matter of survival. 

I hope this decision may help each individual financially as the festive season has arrived. All we need is this welcome move, it will help the lenders, business men and consumers to spend. 

Although beyond all these policies the government needs to control inflation. Indian FPI flows at $20 billion this year which is decadal high and shows the overall  sentiments of the economy and market.       

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