RBI Concludes Monetary Policy Meeting, Raises Inflation Forecast to 5.4%
The Reserve Bank of India's (RBI) monetary policy committee (MPC) decided to keep the repo rate unchanged at 6.50 percent in its second bi-monthly monetary policy meeting of fiscal FY23-24, which concluded on Aug 10. The meeting started on August 8.
While announcing the decision, RBI Governor Shaktikanta Das stated that all members unanimously agreed to keep rates unchanged. The stance is also unchanged: withdrawal of accommodation. The repo rate is the interest rate at which the country's central bank lends money to commercial banks in the event of a liquidity crisis.
In December of last year, the central bank raised the repo rate to 6.50 percent.
The governor stated that the Indian economy remains robust and that the balance sheets of Indian companies remain very strong. The governor went on to say that many steps had been taken to keep inflation under control.
According to the governor of the central bank, inflation will rise in the second quarter of the current fiscal year (Q2 FY24), which runs from July to September. The price of vegetables will rise, causing the increase. Governor Das also stated that the rainfall this time of year has been unusually heavy across the country. However, there are signs of life in rural demand.
The governor stated that retail inflation is expected to rise to 6.2 percent in Q2FY24, up from 5.2 percent previously projected. The inflation forecast for fiscal year FY24 has been raised to 5.4 percent from 5.1 percent.
The GDP growth projection for FY24 remains unchanged at 6.5 percent, while the economic growth forecast for the first quarter of the next fiscal year (Q1 FY25) is 6.6 percent.