The Monetary Policy Committee or MPC is a committee within the Reserve Bank Of India that is responsible for fixing the benchmark interest rates in India. To do this, the MPC meets at least once every quarter and this quarter MPC meeting has started with the sole aim of tackling the issue of high inflation rates.
Amidst this, investors and experts are almost certain that the Monetary Policy Committee will not change the current Repo rate. According to experts, the inflation rate in July was 7.4 per cent which came down to 6.8 per cent in August and is expected to get as low as 5.5 per cent by the end of the calendar year. This means that inflation will be low but still more than the target of 4 per cent. RBI has increased the Repo Rate previously on many different occasions.
This meeting had its effect on the market too, Nifty Bank, Private Bank, PSU Banks, auto and realty indices saw a fall of almost 1 per cent yesterday. Market participants are being cautious until the committee comes up with a verdict. Gains in the U.S. treasury and the rising prices of the Dollar also had an effect on the market. On top of that, NDPL data shows that Foreign Institutional investors sold Indian equities worth ₹14,768 crore in September and ₹2,868 crore in October so far.
So it will be interesting to see what the MPC comes up with in their quarterly meeting this time.