The RBI Monetary Policy Committee or MPC is to announce its decisions on repo rate on 10 August 2023. The meeting which began on Tuesday, is to conclude on Thursday after three days of deliberations. The expectation from several quarters is that the key rates would be kept unchanged. The repo rate is currently at 6.5 percent.

With the rise in vegetable and food prices in India and considering the uncertainties in the international economic and geopolitical scenario, many are of the opinion that the RBI would maintain the status quo. The inflation rate in India is at a three-month high at 4.81 percent (June) but it is within the hold of the RBI.

The pro factors for the policy makers are that the GDP of India stands at 6.1 percent, which indicates good health even though there is a price rise of vegetables and pulses. Along with the other factors, the crude oil prices and the effects of an el nino, which could cast a drier weather for crop production could also find its way into the policy maker’s considerations.

The six-member committee’s main role to keep the inflation rate based on CPI of India under control at 4 percent with a tolerance band of 2-6 percent. The repo rate has a significant role as it decides the availability of liquidity in the market as the Indian bank’s fix their interest rates based upon this. The repo rate was last increased to 6.50 in December 2022.