InvestorQ : When is the Monetary Policy likely to be announced and what to expect in terms of rate cuts?
Aditi Sharma made post

When is the Monetary Policy likely to be announced and what to expect in terms of rate cuts?

Answer
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Mahima Roy answered.
3 weeks ago


With the appointment of the 3 new members to the Monetary Policy Committee or MPC, the RBI has announced that the 3 day MPC meeting will start on 07 October and conclude with the announcement of the monetary policy on 09 October.

In terms of monetary outlook, the MPC is expected to maintain the accommodative stance of the monetary policy while maintaining a dovish stance. However, the MPC is unlikely to cut repo rates due to the persistence of retail inflation above the 6% mark.

The street expectation is that the MPC may focus a lot more on market liquidity rather than on rates and hence may focus more on keeping the liquidity levels abundant through the OMO route. Also, the 3 new members may have very limited time to crystallize new ideas.

In its last policy meeting, the MPC had unanimously voted for status quo on rates but had made rate cuts contingent on durable reduction in inflation. Hence, the first rate cut is only likely in the Feb 2021 policy.