Maintaining its earlier policy the RBI has once again decided to keep the policy rate unchanged for the 11th time in a row but sharply lowered the GDP growth forecast to 6.6 per cent for the current fiscal, as against earlier projection of 7.2 per cent.
As per report by PTI, The Reserve Bank of India (RBI) maintained the status quo on interest rate despite July-September quarter GDP growth falling to 7-quarter low of 5.4 per cent, as against its own projection of 7 per cent.
The rate increase cycle was paused in April last year after six consecutive rate hikes, aggregating to 250 basis points since May 2022.
Announcing the fifth bi-monthly monetary policy for the current financial year, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 6.5 per cent while keeping policy stance unchanged at neutral.
He said MPC will remain watchful of incoming macroeconomic data for future action.
The RBI sharply cut the GDP growth projection to 6.6 per cent from the earlier level of 7.2 per cent, while raising inflation target to 4.8 per cent from the previous projection of 4.5 per cent for the current fiscal.
In a bid to make available more money with banks for lending so as to boost economic activity, the RBI slashed Cash Reserve Ratio to 4 per cent from existing 4.5 per cent.
This would lead to release of Rs 1.16 lakh crore to banks and improve their lending capacity.
The CRR is the percentage of a bank’s total deposits that it is required to maintain in liquid cash with the RBI.
Further, The RBI raised the inflation projection for current fiscal year to 4.8 per cent from 4.5 per cent with Governor Shaktikanta Das saying lingering food price pressures are likely to keep headline inflation elevated in the December quarter.
Consumer price index (CPI)-based inflation increased sharply in September and October 2024 led by an unanticipated increase in food prices.
Core inflation, though at subdued levels, also registered a pick-up in October. Fuel group remained in deflation for the 14th consecutive month in October.
