RBI maintains repo rate at 6.5%; Q4FY24 inflation forecast reduced to 5%.
Governor Shaktikanta Das announced that the Reserve Bank of India’s Monetary Policy Committee (RBI MPC) has opted to maintain the repo rate at 6.5 percent for the sixth consecutive time, with a majority decision of 5-1.
The last adjustment to the repo rate occurred in February 2023, when it was increased from 6.25 percent to 6.5 percent. During the period between May 2022 and February 2023, the repo rate saw a cumulative rise of 250 basis points (bps).
Das mentioned that the full ramifications of the 250 basis points increase in the repo rate are yet to be realized.
Earlier this week, a Business Standard survey had anticipated that the repo rate would remain unchanged. The RBI MPC has also chosen to maintain its stance of “withdrawal of accommodation” with a majority of 5-1. Regarding inflation, Governor Das has sustained the forecast for 2023-24 at 5.4 percent. However, the projection for the current quarter has been revised downward to 5 percent from the previous 5.2 percent. For FY25, the inflation outlook remains steady at 4.5 percent, with Q1 at 5 percent (previously 5.2 percent), Q2 at 4 percent, Q3 at 4.6 percent (previously 4.7 percent), and Q4 at 4.7 percent.
The RBI MPC’s decision coincides with a period where India’s inflation rate has remained below 6 percent for four consecutive months since September 2023, although it has not yet attained the 4 percent target. In December 2023, the retail inflation rate stood at 5.69 percent.
Inflation had declined to 4.87 percent in October last year but subsequently increased to 5.55 percent in November.
The Marginal Standing Facility rate remains unchanged at 6.75 percent, while the Standing Deposit Facility rate is maintained at 6.25 percent.
Regarding India’s economy, Das projected a GDP growth rate of 7.3 percent for FY24 (2023-24). For FY25, the GDP growth forecast remains at 7 percent, with Q1 at 7.2 percent, Q2 at 6.8 percent, Q3 at 7 percent, and Q4 at 6.9 percent.
Notably, the GDP growth projections for Q2FY25 and Q3FY25 have been raised from 6.5 percent and 6.4 percent, respectively.
About 17,000 employees of the Reserve Bank of India are set to go on strike today for better retirement benefits Read more
Three banks snapped up almost 90 percent of bonds sold by Indian states to foreigners, and turned them into derivatives, Read more
The rupee on Friday hit over two-year low amid continued selling by foreign institutional investors in domestic stock and debt Read more
New Delhi: The gold bond scheme has evoked "excellent response" with the government receiving 63,000 applications for purchase of bonds Read more
