RBI repo rate stays at 6.5pc, no change for 7th consecutive time
The Reserve Bank of India has decided to keep its policy rate unchanged at 6.5 per cent -- for the seventh time in a row.
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The Reserve Bank of India has decided to keep its policy rate unchanged at 6.5 per cent -- for the seventh time in a row. 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.
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.
The central bank retained inflation projection at 4.5 per cent for the current financial year, lower than 5.4 per cent in the last fiscal.
Assuming a normal monsoon this year, CPI (consumer price index-based) inflation for the current year is projected at 4.5 per cent, with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent, and Q4 at 4.5 per cent.
The Reserve Bank Governor also stressed on the need to remain vigilant on food prices, given the forecast of higher temperatures between April-June and said that the impact of reduction in fuel prices on inflation will deepen in the coming months.
The RBI retained 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.
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.
He 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.
Notably, Prime Minister Narendra Modi has said the Reserve Bank has to accord "top-most priority" to growth and at the same time focus on trust and stability.
