RBI maintain status quo, leaves Repo Rate unchanged at 6.5%
By Team Asianet Newsable | First Published Apr 5, 2024, 10:13 AM ISTThe Policy Repo Rate remains unchanged at 6.5%. RBI Governor Shaktikanta Das announced this decision following the two-day review meeting of the MPC, which commenced on April 3 and concluded on April 5. The decision was made with a 5:1 majority vote by the MPC
The Reserve Bank of India's Monetary Policy Committee decides to maintain the status quo in the first bi-monthly policy of the financial year 2024-25. Policy Repo Rate is left unchanged at 6.5 per cent. The announcement came during the announcement of the first monetary policy of the financial year 2024-25 by RBI Governor Shaktikanta Das. The two-day review meeting of the RBI's Monetary Policy Committee (MPC), which sets the rates, commenced on April 3 and concluded on April 5.
The RBI has chosen to maintain the key policy repo rate at 6.5%, marking the seventh consecutive time it has remained unchanged. The decision was made with a 5:1 majority vote by the Monetary Policy Committee (MPC), keeping the policy stance at 'withdrawal of accommodation'.
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Das, leading the six-member MPC, highlighted the influence of global challenges on factors like India's GDP growth and inflation trajectory. The MPC was urged to adopt an 'actively disinflationary' approach.
RBI Governor Shaktikanta Das has revised India's real gross domestic product (GDP) growth forecast for the financial year 2023-24 (FY24) to 7.6 per cent, up from the earlier projection of 7.3 per cent. Additionally, the Reserve Bank of India (RBI) has forecasted the Consumer Price Index (CPI) inflation for the financial year 2024-2025 (FY25) at 4.5 per cent, assuming a normal monsoon. The RBI's Monetary Policy Committee (MPC) aims to keep inflation, symbolized as the "elephant," within the lower range for an extended period.
Deepak Agrawal, Chief Investment Officer for Debt at Kotak Mahindra Asset Management Company (AMC), commented on the strong growth outlook for FY25, stating that it provides flexibility for the RBI to maintain its current stance until global monetary easing is observed. Despite acknowledging the persisting challenge of inflation, the RBI MPC opted to keep interest rates unchanged and maintain a stance of "withdrawal of accommodation."
Agrawal further suggested that Kotak Mahindra AMC anticipates a rate cut in the United States, which may prompt the RBI to adjust its MPC stance and lower rates in the latter half of CY2024. He emphasized that the RBI will continue to manage liquidity in a manner where repo rates serve as the operational rate.
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