Key Highlights:
- RBI maintains repo rate at 6.5% for the third consecutive time, signaling stability in monetary policy.
- RBI emphasizes gradual withdrawal of support to manage inflation, with majority MPC support for targeting inflation around 4%.
- MPC revises inflation forecast to 5.4%, while reaffirming its confidence in India’s 6.5% economic growth projection for FY2023-24.
In a decisive move, the Reserve Bank of India (RBI) has chosen to maintain the existing repo rate at 6.5 per cent, marking the third consecutive occasion of no changes. This decision was confirmed following a comprehensive three-day deliberation by the Monetary Policy Committee (MPC), as announced by RBI Governor Shaktikanta Das.
All you need to know about Repo Rate
Explaining the rationale behind the unchanged key policy rate, Governor Das shed light on the cumulative impact of previous rate adjustments. He highlighted the cumulative impact of previous rate adjustments, amounting to 250 basis points, which have influenced the economy and shaped its current trajectory. Despite subdued global demand, Governor Das conveyed his optimism regarding the Indian economy’s robust performance and its continued forward momentum.
“We hold a steadfast commitment to ensuring inflation remains controlled and preserving economic stability,” affirmed Governor Das.
Amidst the current landscape, the MPC has revised its inflation projection upward to 5.4 per cent. This adjustment is attributed primarily to the escalating costs of essential commodities like vegetables, grains, and pulses. Meanwhile, India’s economic growth projection for the fiscal year 2023-24 remains steadfast at 6.5 per cent, consistent with the initial projection made during the June meeting. This forecast envisions growth rates of 8.0 per cent for Q1, 6.5 per cent for Q2, 6.0 per cent for Q3, and 5.7 per cent for Q4.
Overall, the RBI’s decision to maintain the repo rate reflects a steady and cautious approach. As India continues its economic journey, the focus on controlling inflation and fostering growth sets a positive course for the future.
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