RBI MPC Meeting October 2024: Is a Repo Rate Cut Possible?

RBI MPC Meeting begins on October 7, 2024 and will continue till Wednesday, October 9, 2024. The outcome of the Monetary policy meeting seems to be important for the short term direction of markets. In the last year, RBI has been constant in terms of Repo rate and monetary policy stance. According to the RBI, inflation is still a problem but the Indian economy's growth is intact.

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RBI Monetary Policy: Current Repo Rate

RBI Monetary Policy is often considered to be an important economic policy for the development of the country. This policy comes every once in two months which is around six times a year. The policy consists of a 6 member committee headed by RBI Governor Saktikanta Das.

The committee members have a discussion on two topics the first is Repo rate and second one is monetary policy stance. Currently, RBI has kept the repo rate at 6.5% with a withdrawal of accommodation stance.

What if RBI Cut down the Repo Rate?

If RBI cuts the repo rate in the coming meeting then the stock market may react positively to it. The Nifty, Banknifty and Finnifty indices might get volatile in the coming days.

Presently, the market is witnessing correction, and banking stocks are in pain. So, the Repo rate cut may give some support to the bulls for the short term. However, the rate cut can result in an increase in inflation, which is currently around 4.5%. RBI’s Inflation target for the financial year 2025 is kept at 4%.So repo rate cut may create problems for achieving the inflation target.

What if the RBI Hikes the Repo Rate or keeps it Unchanged?

If RBI hikes the Repo rates due to concern for the rise in the future, the stock market may react negatively and Banknifty index may witness more correction. However, the possibility is high that RBI will keep the repo rate unchanged but changes the stance to neutral.

RBI MPC Meeting: Conclusion

RBI MPC meeting is a big event for the stock market. The volatility may rise due to uncertainties on repo rate cuts or rises. The RBI monetary policy meeting outcome will be public tomorrow. So, it will be interesting to know the outcome of the meeting, which may decide the short-term direction of the market.

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