RBI MPC Meeting Outcome Live Updates: Repo Rate Hike, Governor Sanjay Malhotra Speech, Key Announcements In Focus

The Reserve Bank of India (RBI) is widely expected to raise the repo rate by 25 basis points (bps) to 5.50% on Wednesday, with market participants closely watching the central bank's inflation outlook and guidance on the future course of monetary policy.

Indian stock market today is likely to remain cautious ahead of the RBI's policy decision, while rate-sensitive stocks could witness heightened volatility.

The expected rate hike comes against the backdrop of domestic inflation remaining above the RBI's 4% target, while elevated crude oil prices pose an additional external risk. Higher crude prices could exert further pressure on India's inflation trajectory and widen the current account deficit.

As of 8:21 a.m. IST GIFT Nifty indicated a lower opening for the equity benchmark, as it traded 0.4% down. 

Well... it depends. 

Equity market watchers are firmly expecting the Reserve Bank of India to raise benchmark lending rates for the first time in over three and a half years. Broad-based inflation, a weakening rupee, and resilient economic growth have cleared the decks for the central bank to tighten its monetary policy. The move is likely to be the single biggest factor determining the trajectory of Indian markets over the next few sessions.

The timing of the RBI rate decision is also significant, as Indian markets have been battered by a prolonged selloff, with the benchmark indices ending lower for eight straight weeks-marking the longest weekly losing streak since 2001. Since the start of this week, however, the markets have seen a relief rally, with relatively lower crude oil prices fueling a fightback from Dalal Street bulls.

Will an RBI rate hike reinforce the bearish momentum? The answer, say analysts, lies not in the Monetary Policy Committee rate decision itself, but in the guidance it shares.

To know more, read: Selloff To Resume? Not Rate Hike, But RBI Guidance Holds Key For Indian Markets Trajectory

Three-and-a-half years after it last raised the benchmark lending rates, the Reserve Bank of India is expected to resume the rate-hike cycle, as external headwinds have raised the risks linked to a prolonged spell of inflation.

The Monetary Policy Committee (MPC) of the central bank is likely to shift away from its accommodative approach, with analysts largely projecting a 25 basis points hike in the repo rate, or the rate at which the RBI lends to the commercial banks.

Around 60% of economists polled by Reuters poll expect the rates to rise by a quarter percentage point. This would raise the repo rate from 5.25% at present to 5.5%.

The Reserve Bank of India's Monetary Policy Committee (MPC) has unanimously decided to keep the policy repo rate unchanged at 5.25% in August, in line with the expectations of the vast majority of market observers. 

The Standing Deposit Facility (SDF) rate remains unchanged at 5%, while the Marginal Standing Facility (MSF) rate and the bank rate stands at 5.5%.

29 of 30 economists polled by Bloomberg said that the central bank's six-member Monetary Policy Committee, headed by Governor Sanjay Malhotra, is expected to leave the repurchase rate unchanged at 5.25%. Policymakers are also likely to retain a neutral stance as inflation remains well within the RBI's 2%-6% tolerance band.

Hello readers! RBI's MPC will grace us with its repo rate decision today, with majority of the experts expecting a rate hike to tackle the inflationary conditions in the country. 

Tensions are high, so are the stakes. I am Khushi, and I will take you through all the live updates of the MPC meeting today, so grab some tea and stay tuned!