BusinessGovernment appoints Saugata Bhattacharya, Ram Singh and Nagesh Kumar as RBI MPC ahead of policy decision
The government on Tuesday appointed three new external members to the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), including Ram Singh, Saugata Bhattacharya and Nagesh Kumar. The MPC has 6 members, three of whom are central bank governor Shaktikanta Das, deputy governor Michael Patra and executive director Rajeev Ranj.
While three external members are appointed by the central government for four years. Currently, the external members of the MPC are Prof Ashima Goyal, Prof Jayant Verma and New Delhi Principal Advisor Shashank Bhide. His term ends this week.
Ram Singh is the Director of the Delhi School of Economics, Dr. Nagesh Kumar is the Director and Managing Director of the Institute of Industrial Development Studies. Saugata Bhattacharya is an economist.
The MPC meeting will be held from October 7 to 9 The RBI Monetary Policy Committee meeting will be held from October 7 to 9. The decision on the interest rate will be taken in this meeting chaired by Governor Shaktikanta Das.
The last meeting was held in August, during which the committee did not change the rates for the 9th consecutive time. No change in interest rates is expected at the October meeting.
RBI Governor Shaktikanta Das will brief on the decisions of the October 9 meeting. This meeting takes place every two months. The RBI last increased rates from 0.25% to 6.5% in February 2023.
The US Federal Reserve cuts interest rates by 0.5% Earlier on September 18, the US Federal Reserve had reduced interest rates by 0.5%. After this reduction made after four years, the interest rates varied between 4.75% and 5.25%. America is the largest economy in the world, which is why every major decision by its central bank impacts economies around the world.
The Reserve Bank has increased interest rates by 1.10% 5 times since 2020 The Reserve Bank of India (RBI) has reduced interest rates by 0.40% twice during Corona (from March 27, 2020 to October 9, 2020). After that, in the next 10 meetings, the Central Bank increased interest rates five times, made no changes four times and reduced them once by 0.50% in August 2022. Before Covid , the repo rate was at 5.15% on February 6, 2020.
There could be a 0.50% reduction in India by March 2025
Dr VK Vijayakumar, chief investment strategist at Geojit Financial Services, said India could see a rate cut of 0.50% by March 2025. The RBI has not made any changes to the rates. interest after February 8, 2023. Currently, the repo rate is 6.50%. Vijay Bharadiya, founder of Wallfort Financial Services Limited, said the rate cut is a bold move that can encourage other global central banks, including the Reserve Bank of India, to adopt a looser monetary policy.
The key rate is a powerful tool to fight inflationEvery central bank has a powerful tool to fight inflation: the key rate. When inflation is very high, the central bank attempts to reduce the flow of money in the economy by increasing the policy rate.
If the policy rate is high, the loan that banks get from the Central Bank will be expensive. In exchange, banks make loans more expensive for their customers. This reduces the flow of money in the economy. If money flow decreases, demand decreases and inflation decreases.
Similarly, when the economy is going through a bad phase, it is necessary to increase monetary flows to revive the economy. In such a situation, the Central Bank reduces the key rate. Due to this, the loan received by the banks from the Central Bank becomes cheaper and the customers also get the loan at a cheaper rate.