Picture ; ANI / X
The Reserve Bank of India has decided to keep policy rate unchanged for the seventh time in a row and said that it remains vigilant towards upside risks to food inflation. 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 first 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. He said MPC will remain watchful of food inflation.
The six-member rate-setting panel by a majority vote of 5:1 favoured the status quo on interest rate, while maintaining focus on withdrawal of accommodative stance. In February, the Consumer Price-based Inflation (CPI) stood at 5.1 per cent. The government has mandated RBI to ensure CPI inflation at 4 per cent with a margin of 2 per cent on either side.
Unveiling the decisions of the first monetary policy committee meeting of FY25, RBI Governor Shaktikanta Das emphasized the significance of keeping the elephant in the forest while stating that the CPI inflation projections for FY25 has been reduced to 4.5 per cent from earlier 4.7 per cent.
ON Growth, GDP growth forecast of 7 per cent for 2024-25 financial year, lower than the 7.6 per cent expansion estimated for FY24.
In its February monetary policy, the RBI had projected the GDP growth rate of 7 per cent for the financial year beginning April 1. Announcing the current fiscal’s first bi-monthly monetary policy, RBI Governor Shaktikanta Das said the rural demand is gathering pace, and sustained growth in manufacturing sector should boost private investment.
However, there are headwinds from geopolitical tensions and disruptions in the global trade route. Das further said the country’s real GDP is expected to grow 7 per cent in 2024-25, with June quarter growth at 7 per cent, and September quarter at 6.9 per cent.
In the third and fourth quarter the growth is expected to be 7 per cent each.
