RBI Governor Led MPC Keeps Repo Rate Unchanged At 6.50%

The Reserve Bank Governor Shaktikanta Das on Friday announced that the Monetary Policy Committee (MPC) has decided to keep the repo rates unchanged at 6.50 percent.

This is the seventh time that the 6 member Monetary Policy Committee has decided to keep the key rates unchanged.

This is the first Monetary Policy of the financial year 2024-25. The three-day MPC review meeting, which commenced on April 3, Wednesday, and concluded today, April 5.

Consequently, the Marginal Standing Facility (MSF) rate and the bank rate were at 6.75 per cent and the Standing Deposit Facility (SDF) rate remained at 6.25 per cent.

The Monetary Policy Committee voted 5:1 majority to maintain the withdrawal of the accommodation stance to ensure inflation aligns with target while supporting growth.

Rational for this decision

"Since the last policy, the growth inflation dynamics have played out favourably. Growth has continued to sustain its momentum surpassing all projections," said Das during his speech.

"MPC will remain resolute in its commitment to align inflation to RBI's target of 4 er cent," added Das

'Headline inflation has eased to 5.1 per cent during both January and February. Core Inflation has also declined steadily over the past 9 months to its lowest level in the series," said Governor.

"The fuel component of CPI remained in deflation for six consecutive months. Food Inflation pressures however accentuated in February," he added.

"Elephant in the room (inflation) appears to have gone out for a walk, we want it to remain in forest," he added.

Assessment of Growth and Inflation

"Global trade is expected to grow faster in 2024 although weaker than his historical average. Inflation is moving closer to targets but the last mile of disinflation is turning out to be challenging," said Das.

Das further mentioned that India's real GDP is expected to expand by 7 percent in the fiscal year 2024-25, with growth rates of 7 percent in the June quarter and 6.9 percent in the September quarter. Subsequently, growth of 7 percent is expected in both the third and fourth quarters.