RBI Monetary Policy: Central Bank Keeps Repo Rate Unchanged At 6.5%; FY25 GDP Growth Forecast At 7%

Repo rate is the rate at which the RBI lends short-term funds to banks. The repo rate is currently at 6.5 percent and has not been changed since April 2023.

The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the first bi-monthly monetary policy of the financial year 2024-25 today.  The central bank kept repo rate unchanged at 6.5%.

The RBI’s Monetary Policy Committee (MPC) voted by a 5:1 majority to keep key rates unchanged at 6.5%. The central bank also maintained the policy stance at ‘withdrawal of accommodation’, added RBI Governor Shaktikanta Das.

On monetary policy decisions, RBI Governor Shaktikanta Das said, “The Standing Deposit Facility rate remains at 6.25% and the Marginal Standing Facility rate and Bank Rate remain at 6.75%.”

RBI Monetary Policy: Governor On Inflation:

While giving view on Inflation, RBI governor highlighted that , “Core inflation declined steadily. Ensure to meet the target 4% for inflation and see upside risk on inflation. The MPC must be ‘actively disinflationary.’

The two-day meeting of the Monetary Policy Committee (MPC) headed by RBI governor Shaktikanta Das started on Wednesday, April 3, and concluded today i.e. on April 5.

Considering a normal monsoon season this time, the RBI governor said that CPI inflation for FY 2024-25 will be at 4.5%. On a quarterly basis, CPI inflation is expected to be 4.9% in Q1, 3.8% in Q2, 4.6% in Q3, and 4.5% in Q4.

RBI Monetary Policy: Central Bank On GDP Growth

The Reserve Bank of India in its MPC meet forecasted the GDP growth for financial year 2024-25 at 7% for the Indian economy. Quarterly break-up is projected at 7.1% in Q1, 6.9% in Q2 and 7% in Q3 and Q4. The risks are evenly balanced.

RBI Governor Shaktikanta Das says, “…India presents a different picture on account of its fiscal consolidation and faster GDP growth. Turning to domestic growth, domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and an improving global environment. The second advance estimates placed the real GDP growth at 7.6% for 2023-24, the third successive year of 7% or higher growth.”

RBI Monetary Policy: What Is Repo Rate?

Repo rate is the rate at which the RBI lends short-term funds to banks. The repo rate is currently at 6.5 percent and has not been changed since April 2023.