RBI keeps policy repo rate unchanged at 6.5% for the eighth time in a row
07 Jun 2024
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) at its meeting on Friday decided to keep the policy repo rate unchanged at 6.50 per cent, for the eighth time in a row.
With the repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent, the standing deposit facility (SDF) rate also remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
The MPC said it is focused on aligning the inflation rate with the target rate and may withdraw accommodative stance, while supporting growth.
RBI has projected CPI inflation for 2024-25 at 4.5 per cent with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent and Q4 at 4.5 per cent with evenly balanced risks. RBI has set a medium term target for consumer price index (CPI) inflation of 4 per cent within a +/- 2 per cent band, while supporting growth.
Still, rising incidence of adverse climate events can impart considerable uncertainty to the food inflation trajectory, it added.
RBI said domestic economic activity is showing resilience with south-west monsoon expected to be above normal, sustained momentum in manufacturing and services activity. All these are expected to enable a revival in private consumption and investment activity.
According to RBI’s assessment, India’s real GDP growth for 2024-25 is expected to grow at 7.2 per cent with projected Q1 growth of 7.3 per cent, Q2 growth of 7.2 per cent, Q3 growth of 7.3 per cent and Q4 growth of 7.2 per cent.
On the global front, RBI noted that economic activity is rebalancing and the global economy is expected to grow at a stable pace in 2024. However, uncertainty in the financial and equity markets continue.
Non-energy commodity prices have firmed up, with gold prices surging to record highs on safe haven demand, showing a return to stability.
