Next MPC Meet Scheduled For Oct. 7-9

India's Monetary Policy Committee will meet next between Oct. 7 and 9, the Reserve Bank of India said in a release on Tuesday. The earlier scheduled meeting of the committee had been deferred due to a delay in the reconstitution of the panel.

On Monday, the government appointed three new external members to the MPC — Ashima Goyal, Jayanth R Varma and Shashanka Bhide. They have been appointed for a term of four years each or until further orders, whichever is earlier.

The reconstituted committee will now meet.

A Status Quo Policy

The first meeting of the new MPC will likely conclude in a status quo on interest rates. Retail inflation continues to run above India's inflation target of 4 (+/-2)%, leaving little room to lower rates despite weak growth.

Barclays expects retail inflation to remain steady at 6.7% in September 2020, marking the seventh above target reading this year. “We expect the RBI to hold policy rates steady, and to provide its updated economic forecasts at the October MPC review after a gap of eight months. Our inflation trajectory leads us to believe that the MPC will have no option but to leave policy rates steady in the near term,” the research house said in a note dated Oct. 6.

Consumer Price Index inflation was at 6.69% in August compared with a revised estimate of 6.73% in July. Inflation in the food and beverages category rose to 8.29% in August and core inflation remained elevated at 5.6%.

Also Read: India's Second MPC: The Known, The Known-Unknown And The Unknown

“With CPI inflation for August 2020 sticky at a sharp 6.7%, and unlikely to recede meaningfully in September 2020, a repo rate cut in the upcoming policy review seems to be virtually ruled out,” Aditi Nayar, principal economist at ICRA, said after the release of the data.