The third RBI MPC meeting of the financial year 2024-25 has started today. The results of the meeting will be out on August 8. In such a situation, people are looking at whether the Reserve Bank will make any change in the repo rate this time or not. Currently the repo rate remains at 6.50%.
RBI MPC Meeting: The three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has started today from 6 August. This will be the third meeting of the financial year 2024-25. The results of the meeting will be out on 8 August. In such a situation, people’s eyes are on whether the Reserve Bank will make any change in the repo rate this time or not. At present, the repo rate remains at 6.50%. According to experts, there is no possibility of change in RBI repo rate this time too.
However, the true picture will emerge only after the results are announced on August 8. Let us tell you that in February last year, the Reserve Bank had changed the repo rate to 6.50%, since then 7 meetings have been held, but there has been no change in the repo rate.
What is repo rate?
Just as you take a loan from the bank to meet your needs and repay it with a fixed interest, similarly public, private and commercial sector banks also need to take loans to meet their needs. In such a situation, the interest rate at which loans are given to banks by the Reserve Bank of India is called Repo Rate. When the repo rate is low, the common man gets relief and when the repo rate increases, difficulties increase for the common man. When the repo rate increases, banks get loans at a higher interest rate. In such a situation, the loan becomes expensive for the common man. On the other hand, when the repo rate is low, the loans become cheaper.
Why does RBI change the repo rate from time to time
Repo rate is a powerful tool to fight inflation, which RBI uses from time to time according to the situation. When inflation is very high, RBI tries to reduce the money flow in the economy and increases the repo rate. Usually an increase of 0.50 or less is made. But when the economy goes through a bad phase, there is a need to increase the money flow for recovery and in such a situation RBI reduces the repo rate and if there is no need, then it keeps the repo rate stable for some time.
Why MPC meeting is held every two months
Actually, to maintain a balance between rising inflation in the country and suddenly decreasing demand for goods in the market, the Reserve Bank has to hold meetings from time to time. In such a situation, the six-member team of RBI discusses the change in the policy repo rate to achieve the inflation target through the monetary policy review meeting. This meeting goes on for three days and on the third day the RBI Governor announces the decision taken in the meeting. According to the rules, it is necessary to hold RBI MPC Meeting at least four times a year. The committee is responsible for deciding the interval at which these monetary policy meetings will be held.
The committee also has the right to increase or decrease the meeting as per the need. If the committee feels that this meeting should be held more than 4 times a year, then a notification is issued regarding this. The last time the notification was issued, it was said that the Monetary Policy Committee will meet 6 times for 2023-24 which will be held in the months of April, June, August, October, December and February. Today the results of the sixth bi-monthly meeting of the MPC for the financial year 2023-24 are going to come.
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