RBI MPC: Repo rate kept unchanged at 6.5%, FY24 GDP estimate hiked to 7%
New Delhi, Dec 8, 2023
Reserve Bank's Monetary Policy Committee decides to keep the repo rate unchanged at 6.5% and also keeps the FY24 inflation forecast unchanged at 5.4%
RBI monetary policy announcement: The Reserve Bank of India's Monetary Policy Committee (RBI MPC) kept the repo rate unchanged at 6.5 per cent for the fifth time in a row on Friday. In its bi-annual policy announcement, RBI Governor Shaktikanta Das said the decision was unanimous.
Das also said that with a majority of 5-1, the RBI MPC has decided to maintain the "withdrawal of accommodation" stance. He, however, cautioned that the near-term forecast remains uncertain owing to food inflation, which may lead to an uptick in headline inflation figures in November and December.
The RBI MPC has now kept the repo rate unchanged since April. It raised the repo rate by a total of 250 basis points (bps) between May 2022 and February 2023 in a bid to cool surging inflation, which dropped to a four-month low of 4.87 per cent in October this year.
RBI monetary policy announcement: FY24 GDP estimate hiked to 7%
Governor Das hiked the gross domestic product (GDP) forecast for 2023-24 (FY24) to 7 per cent from 6.5 per cent earlier. For the third quarter of the current financial year (Q3FY24), the projection has been hiked to 6.5 per cent from 6 per cent. For Q4FY24, the GDP projection has been hiked to 6 per cent from 5.7 per cent earlier.
For Q1FY25, the projection has also been hiked to 6.7 per cent from 6.6 per cent earlier. In Q2FY25 and Q3FY25, the GDP projections have been kept at 6.5 per cent and 6.4 per cent, respectively.
RBI monetary policy announcement: Inflation projections unchaged
On inflation, the monetary policy committee kept the forecast unchanged. In FY24, India's retail inflation forecast has been kept at 5.4 per cent. In Q3FY25, the inflation forecast has been kept at 5.6 per cent and 5.2 per cent in Q4FY24.
In the first quarter of the next financial year (Q1FY25), retail inflation has been projected at 5.2 per cent. In Q2FY25 and Q3FY25, the inflation has been predicted to be 4 per cent and 4.7 per cent respectively.
[The Business Standard]
