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RBI Keeps Repo Rate Unchanged At 6.5% For 9th Consecutive Time

The Reserve Bank of India's Monetary Policy Committee (MPC) decided to keep the repo rate steady at 6.5 percent for the ninth consecutive time.

RBI Keeps Repo Rate Unchanged At 6.5% For 9th Consecutive Time

On Thursday, the Reserve Bank of India’s Monetary Policy Committee (MPC) decided to keep the repo rate steady at 6.5 percent for the ninth consecutive time.

While announcing the decisions of the bi-monthly meeting, RBI Governor Shaktikanta Das said that the MPC made the decision with a 4:2 majority. The committee also decided to maintain the stance of withdrawing accommodation.

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RBI Holds FY25 Inflation Forecast Amid Rising Food Prices And Geopolitical Concerns

The MPC kept its inflation forecast for this fiscal year (FY25) at 4.5 percent, despite concerns about rising food prices affecting core inflation and growing geopolitical tensions that could impact the drop in crude oil prices.

The central bank now expects inflation for Q2, Q3, and Q4 of this fiscal year to be 4.4 percent, 4.7 percent, and 4.3 percent, respectively. Previously, in the June policy, it had predicted 3.8 percent, 4.6 percent, and 4.5 percent for those quarters.

RBI Governor Shaktikanta Das has repeatedly stressed the importance of focusing on reducing inflation to the 4 percent target in a sustainable way before making any policy changes.

The RBI has been dealing with ongoing food inflation, often tracked by the “thali” or food platter, which analysts use to monitor inflation trends. Because of this persistent food inflation, the MPC is likely to keep the key interest rate at 6.5 percent.

The forecasts for FY25, Q2FY25, Q3FY25, and Q4FY25 remain unchanged, but Das said the forecast for Q1FY25 has been lowered to 7.1 percent.

In June 2024, the MPC had predicted India’s GDP would grow by 7.2 percent for FY25. They also estimated growth rates of 7.3 percent, 7.2 percent, 7.3 percent, and 7.2 percent for each of the four quarters of the financial year. The Indian economy grew by 8.2 percent in FY24.

RBI Maintains Repo Rate, Forecasts Growth, and Introduces Reforms

In the June meeting, the RBI decided to keep the Standing Deposit Facility (SDF) rate at 6.25 percent and the Marginal Standing Facility (MSF) rate and Bank Rate at 6.75 percent. They emphasized maintaining the inflation target at 4 percent.

The real GDP growth forecast for FY25 was raised to 7.2 percent, with quarterly predictions of 7.3 percent for Q1, 7.2 percent for Q2, 7.3 percent for Q3, and 7.2 percent for Q4.

CPI inflation for FY25 was projected at 4.5 percent, with quarterly estimates of 4.9 percent for Q1, 3.8 percent for Q2, 4.6 percent for Q3, and 4.5 percent for Q4.

The RBI proposed several reforms, including changing the definition of bulk deposits to “Single Rupee term deposits of Rs 3 crore and above” for scheduled commercial banks (excluding rural banks) and small finance banks.

They also planned to update guidelines on the export and import of goods and services to align with global trade changes. Additionally, the RBI announced the creation of a Digital Payments Intelligence Platform to reduce payment fraud risks and proposed bringing UPI Lite into the e-mandate framework for automatic replenishment when the balance falls below a set limit.

Also Read: Big Relief For Homeowners As Government Modifies Long Term Capital Gains Tax For Real Estate Transactions

HISTORY

Written By

simran rajpal


Get Breaking News First and Latest Updates from India and around the world on News24. Follow News24 on Facebook, Twitter.

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