Monetary Policy Committee keeps repo rate unchanged at 6.5%, confirms RBI governor Shaktikanta Das
Jun 7, 2024, 11:13 IST
The Indian central bank’s rate-setting panel, the Monetary Policy Committee (MPC), has kept the repo rate unchanged at 6.5%, Shaktikanta Das, governor of the Reserve Bank of India (RBI), confirmed on Friday.
The decision was taken in a majority 4:2 vote by the six-member MPC, headed by RBI Governor Shaktikanta Das. This meeting followed closely on the heels of Lok Sabha 2024 election results and a renewed but less robust mandate for the NDA government, spearheaded by Prime Minister Narendra Modi.
This marks the eighth consecutive instance where the central bank has maintained the status quo on the benchmark repo rate. It had last increased the repo rate to 6.5 percent back in February 2023.
For context, the repo rate is the interest rate at which the RBI lends to banks. When the repo rate is cut, it makes borrowing cheaper for banks, which in turn leads to lower loan rates and consequently, reduced EMIs.
"As expected, the MPC has decided to keep the repo rate unchanged at 6.5%. This decision aligns with the MPC's calibrated measures to tackle persistent inflation. The RBI has successfully maintained the resilience of the Indian economy, contributing to sustained growth momentum even amidst a challenging global environment," said Mr Ashwin Chadha, CEO of India Sotheby's International Realty.
"The good news is that CPI inflation continues to soften, and the GDP growth rate is projected to remain above 7% for all quarters of FY2024-25. Additionally, the monsoon is expected to be favorable, reducing potential risks to the economy."
Governor Das, in his post-policy press conference, also underscored the need for a balanced approach in handling monetary policy. He highlighted the MPC's strategy of gradually scaling back accommodation to ensure that inflation meets the targeted range, while still fostering economic growth.
“Monetary policy must continue to remain disinflationary and be resolute in its commitment to aligning inflation to the target of 4 per cent on a durable basis to sustain price stability and outset strong foundation,” the RBI Governor stated.
The RBI has also updated its growth forecasts for the 2024-25 financial year, predicting a GDP growth rate of 7.2%. The projections for each quarter are 7.3% for Q1, 7.2% for Q2, 7.3% for Q3, and 7.2% for Q4. Governor Das pointed out that the risks to this growth outlook are evenly distributed.
By maintaining the repo rate at its current level, the RBI signals its cautious stance on balancing the dual objectives of inflation control and economic recovery support.
(With inputs from ANI)
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The decision was taken in a majority 4:2 vote by the six-member MPC, headed by RBI Governor Shaktikanta Das. This meeting followed closely on the heels of Lok Sabha 2024 election results and a renewed but less robust mandate for the NDA government, spearheaded by Prime Minister Narendra Modi.
This marks the eighth consecutive instance where the central bank has maintained the status quo on the benchmark repo rate. It had last increased the repo rate to 6.5 percent back in February 2023.
For context, the repo rate is the interest rate at which the RBI lends to banks. When the repo rate is cut, it makes borrowing cheaper for banks, which in turn leads to lower loan rates and consequently, reduced EMIs.
"As expected, the MPC has decided to keep the repo rate unchanged at 6.5%. This decision aligns with the MPC's calibrated measures to tackle persistent inflation. The RBI has successfully maintained the resilience of the Indian economy, contributing to sustained growth momentum even amidst a challenging global environment," said Mr Ashwin Chadha, CEO of India Sotheby's International Realty.
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Governor Das, in his post-policy press conference, also underscored the need for a balanced approach in handling monetary policy. He highlighted the MPC's strategy of gradually scaling back accommodation to ensure that inflation meets the targeted range, while still fostering economic growth.
“Monetary policy must continue to remain disinflationary and be resolute in its commitment to aligning inflation to the target of 4 per cent on a durable basis to sustain price stability and outset strong foundation,” the RBI Governor stated.
The RBI has also updated its growth forecasts for the 2024-25 financial year, predicting a GDP growth rate of 7.2%. The projections for each quarter are 7.3% for Q1, 7.2% for Q2, 7.3% for Q3, and 7.2% for Q4. Governor Das pointed out that the risks to this growth outlook are evenly distributed.
By maintaining the repo rate at its current level, the RBI signals its cautious stance on balancing the dual objectives of inflation control and economic recovery support.
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This decision comes at a crucial time, as the global economy contends with uncertainties from geopolitical conflicts and the ongoing impacts of the COVID-19 pandemic.(With inputs from ANI)