RBI MPC Meeting 2024 LIVE: Repo rate remains unchanged at 6.5%, FY25 CPI inflation seen at 4.5% | Economy & Policy News

RBI Governor Shaktikanta Das emphasised that the MPC may overlook high food inflation if it is temporary but cannot ignore persistently high food inflation due to its potential spillover effects. The public primarily perceives inflation through the lens of food price, Das stated.

– Q1FY25 GDP growth estimates at 7.1%

– Q2FY25: GDP growth estimates at 7.2%

– Q3FY25 GDP growth estimates at 7.3%

– Q4FY25 GDP growth estimates at 7.2%

High food inflation also impacts household inflation expectation, RBI Governor Das stated today. 

The MPC determined that it is crucial for monetary policy to remain consistent while closely monitoring inflation. The panel emphasised maintaining a primary focus on inflation to support sustained economic growth, RBI Governor Shaktikanta Das said today.

The Marginal Standing Facility (MSF) and the Standard Deposit Facility (SDF) rates remain unchanged at 6.75 per cent and 6.25 per cent, RBI Governor Shaktikanta Das said today.

The RBI kept its benchmark interest rate unchanged at 6.5 per cent for the nineth consecutive time.

India’s record high reserves, low current account deficit and stable rupee give the RBI enough buffer to focus on domestic inflation,  Gaurav Kapur, chief economist of IndusInd Bank Ltd, told Bloomberg. 

Inflation in June rose to 5.08%, more than 1 percentage point above the RBI’s target, due of high food prices. While inflation may ease in July and August for statistical reasons, it’s expected to pick up again in September.

RBI is expected to hold its key rates at the forthcoming policy review, but may sound more confident about reaching its 4 per cent inflation objective. The rate-setting panel may prefer to stick to the ‘withdrawal of accommodation’ stance of the monetary policy, HSBC said in its report.

“Food inflation pressures remain elevated due to adverse weather patterns — heatwave conditions during the summer months and a slow start to the monsoon in June. Daily food prices indicate that retail prices remained elevated in July with supplies of perishables such as vegetables disrupted. Given that growth conditions remain strong, the policy will remain focused on ensuring headline inflation moderates towards the 4 per cent target on a sustainable basis,” Gaura Sen Gupta, chief economist at IDFC First Bank, said.

“High growth in FY24, combined with inflation of 4.9 per cent in Q1 FY2025, is unlikely to shift the voting pattern of the four members who voted for a status quo in the June 2024 meeting. If the food inflation outlook improves with normal rains in the second half of the monsoon season, and in the absence of global or domestic shocks, a stance change is possible in October 2024,” said Aditi Nayar, chief economist, ICRA.

In the previous MPC meeting, the RBI  maintained a status quo on the repo rate. RBI’s six-member panel kept the benchmark rate unchanged at 6.5 per cent for the eighth consecutive time. 

The RBI’s six-member Monetary Policy Committee (MPC) is expected to maintain a status quo for the ninth consecutive policy review, all 10 respondents said in a Business Standard poll. Economists cited inflation and food prices as factors likely to influence MPC’s decision.