The Reserve Bank of India’s Monetary Policy Committee has decided to keep the policy repo rate unchanged at 6.5 per cent. The six-member committee voted by 5:1 majority to keep the repo rate unchanged in its last meeting of FY24 as retail inflation continues to be above its target of 4 per cent. This is the sixth meeting that the MPC has maintained a status quo on the repo rate (the interest rate at which banks draw funds from RBI to overcome short-term liquidity mismatches). CPI for FY24 is projected at 5.4 per cent, while it’s likely to be at 4.5 per cent in FY25. RBI has pegged real GDP growth for FY25 at 7 per cent. Next monetary policy committee (MPC) meeting scheduled during April 3-5, 2024.

Key Highlights

  • Repo Rate kept unchanged at 6.5 per cent.
  • GDP growth for FY25 projected at 7 per cent, lower than 7.3 per cent this fiscal.
  • Exchange rate of Indian rupee remained fairly stable in the current fiscal.
  • Retail inflation to average 5.4 per cent this fiscal, to come down to 4.5 per cent in FY25.
  • Current economic momentum to sustain in the next fiscal and Indian economy making confident progress on strong, sustained growth path.
  • Recovery in rabi sowing, sustained profitability in manufacturing, resilience of services to support economic activity in FY25.
  • Investment cycle gaining steam, signs of revival in private sector capex
  • Rural demand continues to gather pace, urban consumption remains strong
  • Govt adhering to fiscal consolidation path; domestic economic activity strong
  • Uncertainty in food prices continue to impinge on headline inflation
  • Increasing geopolitical tensions are impacting supply chain, putting pressure on commodity prices
  • Forex reserve at $622.5 billion; comfortable for meeting foreign obligations
  • Domestic financial system remains resilient with a healthy balance sheet
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