 "RBI Governor Shaktikanta Das")
RBI Governor Shaktikanta Das
The Reserve Bank of India’s Monetary Policy Committee (MPC) decided on Friday to keep the repo rate unchanged at 6.5 per cent for the eighth consecutive time.Â
The decision was taken with a 4-2 majority.
To align the inflation with RBI’s target, MPC decided to continue the ‘withdrawal of accommodation’ stance.
The repo rate was last changed in February 2023, when it was hiked from 6.25 per cent to 6.5 per cent. Between May 2022 and February 2023, the repo rate was raised by 250 basis points (bps).
RBI increased GDP growth forecast for FY25
Food inflation remains a worry for RBI
Das stated that food inflation remains a big worry for the RBI. The forecast of an above-normal monsoon augurs well for the Kharif Crop outlook, he said.
The central bank governor informed that while the core CPI inflation continued to soften for the eleventh straight month since June last year, persisting food inflation offset those gains.Â
However, assuming a normal Monsoon based on the weather department’s forecasts, Das said that the CPI for FY25 is projected at 4.5 per cent. The quarter-wise breakups for CPI are 4.9 per cent in the first quarter, 3.9 per cent in the second quarter, 4.6 per cent in the third quarter, and 4.5 per cent in the fourth quarter.
“Uncertainties related to food inflation need to be monitored. Need inflation reduction to 4 per cent level on a durable basis while supporting growth,” Das said.
This time, economists expected the MPC to maintain the benchmark repo rate at 6.5 per cent, balancing the need to control inflation with fostering economic growth.
Talking about the health of the Indian banking sector, Das stated that the banking system remains resilient, backed by sound asset quality and rise in profitability. “The NBFCs have displayed strong financials in FY24,” he said. The banking sector, NBFCs and overall financial sector remain robust, the governor added.
First Published: Jun 07 2024 | 10:16 AM IST
