Today, October 6, the Reserve Bank of India (RBI) released its fourth bimonthly monetary policy. The Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, kept rates and stance unchanged as anticipated. The MPC unanimously opted to maintain the policy repo rate at 6.50%. As a result, the bank rate, marginal standing facility, and standing deposit facility (SDF) rates all stay at 6.75%. The MPC also resolved to continue concentrating on the withdrawal of accommodation to make sure that inflation gradually aligns to the target while promoting growth, with a majority of 5 out of 6 members.
- RBI keeps the CPI inflation forecast for FY24 at 5.4%;
- Raises the CPI inflation forecast for Q2FY24 to 6.4% from 6.2%;
- Lowers the CPI inflation forecast for Q3FY24 to 5.6% from 5.7%;
- Maintains the 5.2% CPI inflation forecast for Q4FY24; and
- Kept the 5.4% CPI inflation forecast for April-June 2024, or Q1FY25.
- The FY24 real GDP growth forecast remains at 6.5%.
- 6.5% is the same as the Q2FY24 GDP projection.
- The Q3FY24 GDP projection remains at 6%.
- 5.7% is the unchanged Q4FY24 GDP prediction.
- -Q1FY25 GDP growth is expected to increase by 6.6% from April to June 2024.
Rates of Interest
- The repo rate remains at 6.5%.
- The rate for the standing deposit facility (SDF) is at 6.25%.
- The Bank Rate and the Marginal Standing Facility (MSF) Rate remain at 6.75%.
- CRR at 4.5%
On the potency of strong domestic demand, domestic economic activity displays resilience in contrast to global trends.
The governor declared that India was ready to become the new growth engine of the world.
The MPC chose to keep the stance and maintain policy rates steady in light of the changing growth dynamics and the cumulative 250 basis point increase in the repo rate, which is still transmitting in the system.