Mumbai, Apr 5: The Reserve Bank of India's Monetary Policy Committee (MPC) has decided to keep the policy repo rate unchanged at 6.5 per cent as retail inflation continues to be above its target of 4 per cent.
This is the seventh consecutive meeting that the MPC has maintained a status quo on the repo rate. The repo rate, is the interest rate at which banks draw funds from RBI to overcome short-term liquidity mismatches.
This is the first monetary policy statement of the current financial year 2024-25, said RBI Governor Shaktikanta Das.
“It was decided by a majority of 5:1 to keep the interest rate unchanged at 6.50 per cent. Consquently the Standing Deposit Facility, the SDF rate remains at 6.25 per cent. Marginal Standing Facility (MSF) rate and the bank remain at 6.75 per cent,” said Das.
The MPC had maintained the status quo on policy rates and stance in its last review which was held in February 2024.
RBI has also maintained the stance of ‘withdrawal of accommodation'
Meanwhile, the India Meteorological Department's (IMD) recent announcement of above-normal temperatures during April-June may be a concern regarding rise in prices of vegetable, fruits and other perishable items.
“The tight demand-supply situation in certain categories of pulses and the production outcome of key vegetables want close monitoring especially in the background of the forecast of above normal temperature in the coming months” said RBI Governor Shaktikanta Das.
Going forward, the outlook for agriculture and rural activity appears bright, said Governor Das.
The strengthening of rural demand, improvement in employment condition and is expected to boost private consumption, Das added.
Monetary Policy Committee was constituted under the Reserve Bank of India Act, 1934. MPC is a six-member committee comprising three members from RBI including Governor Shaktikanta Das and three members appointed by the Central government. The three-day review meeting of the MPC that commenced on April 2 concluded today.
Growth has continued to sustain its momentum surpassing all projections. headline inflation has eased. to 5.1 per cent during both January and February, he said.
Following are the highlights of the RBI's first bi-monthly monetary policy statement for 2024-25 fiscal announced by Governor Shaktikanta Das.
* Benchmark interest rate or repo rate kept unchanged at 6.5 pc
* GDP growth for 2024-25 retained at 7 pc, lower than 7.6 pc last fiscal
* Retail inflation to average 4.5 pc this fiscal, lower than 5.4 pc in FY24
* Food price uncertainties to continue to weigh on inflation outlook
* With rural demand catching up, consumption is expected to support economic growth in FY25
* Outlook for agriculture, rural activity appears bright, with good rabi wheat crop and improved prospects of kharif crops, due to expected normal monsoon
* Strong rural demand, moderating inflationary pressures and sustained momentum in manufacturing and services sector to boost private consumption
* The headwinds from protracted geopolitical tensions and increasing disruptions in trade routes, however, pose risks to the outlook
* Strong growth momentum, along with GDP projections for 2024-25, gives RBI the policy space to unwaveringly focus on price stability
* Trading of Sovereign Green Bonds permitted in International Financial Services Centre (IFSC)
* To launch a mobile app to facilitate retail participation in G-secs
* To allow cash deposits in banks through UPI
* Permits non-bank payment system operators to offer CBDC (Central Bank Digital Currency) wallets
* Net inflows by foreign porfolio investors (FPI) stood at USD 41.6 billion during 2023-24, the second highest level of FPI inflow after 2014-15
* India continues to be the largest recipient of remittances in the world
* Current Account Deficit in 2024-25 to remain at a level that is both viable and eminently manageable
* The Indian rupee remained largely range-bound as compared to its emerging market peers as well as a few advanced economies during 2023-24.
* INR most stable among major currencies in FY24
* Next monetary policy committee (MPC) meeting scheduled during June 5 to 7, 2024. (AGENCIES)
