The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Thursday decided by a 5 to 1 majority to keep the policy rate unchanged at 6.5%.
RBI MPC also decided to maintain the monetary policy stance as “withdrawal of accommodation”.
“In this uncertain global environment, the Indian economy has performed remarkably well, inflation on a downward trajectory,” the Governor said.
Governor Das further announced that MSF and SDF rates remain unchanged at 6.75% and 6.25%. “Growth is accelerating and exceeding most analysts’ forecasts,” he said.
GDP forecast
Announcing the MPC decision, the governor said Real GDP growth is forecast at 7% for 2024-25. For next year, real gdp growth for Q1 2024-25 is projected at 7.2%, for Q2 at 6.8%, Q3 at 7% and Q4 at 6.9%, the risks are equally balanced.
“Although global trade momentum remains weak, it is showing signs of recovery and is likely to grow faster in 2024,” the governor said.
Projection of inflation
Governor Das said the CPI inflation for the current year is projected at 5.4% with Q4 at 5%. For the coming year (2024-25), CPI inflation is projected at 4.5%. CPI inflation for Q1 2024-25 is projected at 5%, Q2 at 4% and Q3 at 4.6% and Q4 at 4.7%.
“Uncertainty over food prices continues to weigh on headline inflation. MPC remains committed to containing inflation at the 4% target,” Das said.
The governor also stated that the investment cycle is gaining steam aided by a continued push in government capital spending.
The MPC began its three-day meeting on February 6, and concluded with the RBI governor’s address.
Notably, this was the first RBI MPC announcement of 2024. In the last five RBI MPC meetings, the repo rate has been kept unchanged at 6.5%.
Ahead of the policy announcements, the Indian rupee appreciated, helped by better risk appetite amid a lull in the dollar’s recent rally.
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