RBI has kept policy repo rate unchanged at 6.5% in a unanimous decision. Standing Deposit Facility Rate remains at 6.25%; while Marginal Standing Facility Rate and Bank Rate also unchanged at 6.75%
Repo rate to remain unchanged at 6.5%
On June 8, Reserve Bank of India (RBI) Governor Shaktikanta Das announced the decision of the Monetary Policy Committee (MPC) to keep the key policy repo rate unchanged at 6.5 percent. This decision aligns with the forecast of economists in a CNBC-TV18 poll, as inflation levels remain within the central bank’s comfort zone.
Governor Das stated that the MPC unanimously agreed to maintain the policy repo rate at 6.50 percent. Additionally, the committee, with a majority of five out of six members, also decided to maintain its focus on withdrawing accommodation measures.
FY24 GDP growth projection unchanged at 6.5%
The Reserve Bank of India (RBI) has maintained the forecast for real GDP growth at 6.5 percent, which was initially estimated in April. This projection takes into account factors such as higher Rabi crop output, moderating commodity prices, the trajectory of the monsoon, and the government’s plan for increased capital expenditure.
Furthermore, the Reserve Bank of India (RBI) has slightly lowered the GDP projections for the second half of the fiscal year 2023-24, while raising the projections for the first half of the year compared to earlier estimates.
The Reserve Bank of India (RBI) has maintained the forecast for real GDP growth at 6.5 percent, which it initially estimated in April. This projection takes into account factors such as higher Rabi crop output, moderating commodity prices, the trajectory of the monsoon, and the government’s plan for increased capital expenditure.
Furthermore, the GDP projections for the second half of the fiscal year 2023-24 have been slightly lowered, while the projections for the first half of the year have been raised compared to earlier estimates.
Governor Shaktikanta Das flags concerns about inflation
RBI Governor Shaktikanta Das acknowledged that uncertainties surrounding the monsoon and international commodity prices persist, while financial market volatility poses upward risks.
Regarding inflation outlook, the following are the RBI’s projections for different periods:
- For the fiscal year 2023-24 (FY24), the inflation projection is 5.1%, which is slightly lower than the earlier projection of 5.2%.
- In the first quarter of FY24 (Q1FY24), the inflation projection is 4.6%, lower than the previous estimate of 5.1%.
- In the second quarter of FY24 (Q2FY24), the inflation projection is 5.2%, slightly lower than the earlier projection of 5.4%.
- In the third quarter of FY24 (Q3FY24), the inflation projection remains at 5.4%, unchanged from the previous estimate.
- In the fourth quarter of FY24 (Q4FY24), the inflation projection is 5.2%, the same as the earlier projection.
It’s worth noting that these projections are subject to the aforementioned uncertainties and risks associated with monsoon, international commodity prices, and financial market volatility.
Also, Check our article on Relationship between RBI Repo Rate and stock markets
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