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RBI keeps repo rate unchanged, hikes FY25 GDP growth forecast: Details here

2024-06-09 11:16   Services   Delhi   12 views Reference: 221

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In its second meeting for FY25 and the first after the general elections, the Reserve Bank of India (RBI) announced on Friday that the benchmark repo rate will remain unchanged at 6.5 per cent for the eighth consecutive time. The decision was taken by the RBI's six-member Monetary Policy Committee (MPC) by a 4:2 majority.

The MPC, headed by RBI governor Shaktikanta Das, also decided to continue its stance of 'withdrawal of accommodation

The RBI raised its GDP growth forecast for FY25 to 7.2 per cent from 7 per cent earlier, while the inflation forecast was retained at 4.5 per cent.

Speaking about the disinflationary trend in the core Consumer Price Index (CPI) inflation for the 11th consecutive month, Das highlighted that high food inflation offset the overall gains.

However, assuming a normal monsoon based on the weather department's forecasts, Das said that the CPI for FY25 is projected at 4.5 per cent. The quarter-wise breakups for CPI given by Das are 4.9 per cent in the first quarter, 3.9 per cent in the second quarter, 4.6 per cent in the third quarter, and 4.5 per cent in the fourth quarter.

the core Consumer Price Index (CPI) inflation for the 11th consecutive month, Das highlighted that high food inflation offset the overall gains.

However, assuming a normal monsoon based on the weather department's forecasts, Das said that the CPI for FY25 is projected at 4.5 per cent. The quarter-wise breakups for CPI given by Das are 4.9 per cent in the first quarter, 3.9 per cent in the second quarter, 4.6 per cent in the third quarter, and 4.5 per cent in the fourth quarter.

Key highlights of the June RBI MPC meeting

Benchmark repo rate unchanged at 6.5 per cent for the eighth consecutive time by a 4:2 majority.

Continuation of the 'withdrawal of accommodation' stance by RBI.

Increase in GDP growth forecast for FY25 to 7.2 per cent from 7 per cent earlier.

The inflation forecast for FY25 is kept at 4.5 per cent.

Overall, the financial sector's health remains robust, backed by asset quality and a rise in profitability in the banking and Non-Banking Financial Companies (NBFC) segments. A few outliers persist for the RBI to watch out for, but there is no big problem at the moment.

Proposal for setting up a Digital Payments Intelligence Platform for network-level intelligence and real-time data sharing across the digital payments ecosystem.

The surge in Foreign Portfolio Investor (FPI) flows during FY24, with an inflow totalling $41.6 billion.

What is the RBI's Monetary Policy Committee?

The RBI MPC is entrusted with the responsibility of monetary policy in India. Its primary objective is maintaining price stability while considering growth. The body was constituted in 2016 and is required to meet at least four times a year.

The June FY25 meeting was the RBI's 49th MPC meeting. The committee has six members: Das, Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Rajiv Ranjan, and Michael Debabrata Patra. They have been members since October 2020.