The Reserve Bank of India’s Monetary Policy Committee (RBI MPC) has decided to keep the repo rate unchanged at 6.5 per cent for the seventh consecutive time, Governor Shaktikanta Das announced on Friday. He said a majority of 5-1 took the decision.
The RBI MPC has also decided to keep its stance of “withdrawal of accommodation” unchanged with a majority of 5-1. RBI Governor Das said this was to ensure that inflation aligned with the four per cent target while aligning with growth.
To understand “withdrawal of accomodation”, watch this video published by Business Standard in June, 2023
What the Business Standard poll predicted
Earlier this week, a Business Standard poll predicted that the repo rate would be kept unchanged. The repo rate was last changed in February 2023, when it was hiked from 6.25 per cent to 6.5 per cent. Between May 2022 and February 2023, the repo rate was raised by 250 basis points (bps).
Additionally, Das said that the Standing Deposit Facility (SDF) will remain at 6.25 per cent. The marginal standing facility (MSF) and bank rate will also remain at 6.75 per cent.
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Here is what the RBI governor said about inflation
RBI governor said that core inflation had declined steadily, owing to which MPC must be “actively disinflationary”. He added that the global economy has remained resilient and global trade is expected to grow faster in 2024, however, weaker than its historical average.
While inflation is moving closer to targets, the RBI governor said the last mile is turning out to be challenging. He added that uncertainties in food prices continue to pose challenges, as well as tight global labour markets.
Equity markets have gained, while bond yields have remained volatile.
RBI Governor Shaktikanta Das revised the real gross domestic product (GDP) growth for the financial year 2023-24 (FY24) to 7.6 per cent. Earlier GDP projection for FY24 was 7.3 per cent.
On India’s economy, the RBI has projected the CPI inflation at 4.5 per cent for the financial year 2024-2025 (FY25), assuming normal monsoon.
First Published: Apr 05 2024 | 10:31 AM IST