RBI MPC Meeting: Central Bank Keeps Repo Rate Unchanged At 6.5 Per Cent By 5:1 Majority

RBI MPC Meeting: Real GDP growth for FY25 projected at 7 per cent. For Q1 at 7.1 per cent, Q2 at 6.9 per cent, while Q3 and Q4 each at 7 per cent, Das said

RBI MPC Meeting: This is first meeting of the RBI MPC of the FY24-25 and this is the seventh consecutive occasion where the central bank has opted to maintain the rate at its current level. ( Image Source :Getty )

RBI MPC Meeting: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), headed by Governor Shaktikanta Das, on Friday announced its decision to keep the repo rate unchanged at 6.5 per cent by a 5:1 majority This is the seventh time in a row that the RBI kept the repo rate unchanged. The SDF rate remains at 6.2 per cent, while MSF rate and bank rate stand at 6.75 per cent, Das said. The central bank has also maintained the stance of 'withdrawal of accommodation'.

The series of rate hikes, totaling 250 basis points, which began in May 2022, came to a halt in April of the following year. This pause in the rate increase cycle followed six consecutive increments.

This is first meeting of the RBI MPC of the FY24-25 and this is the seventh consecutive occasion where the central bank has opted to maintain the rate at its current level.

GDP forecast

Real GDP growth for FY25 projected at 7 per cent. For Q1 at 7.1 per cent, Q2 at 6.9 per cent, while Q3 and Q4 each at 7 per cent, Das said.

Inflation projection

As of February, the Consumer Price Index (CPI) indicated an inflation rate of 5.1 per cent. As per the MPC announcements, the govenor mnetioned that CPI inflation projected at 4.5 per cent for FY25. The governor said, "Growth has continued to sustain its momentum, surpassing all projections. The headline inflation has eased to 5.1 per cent during both January and February, and this has come down to 5.1 per cent in these two months from the earlier peak of 5.7 per cent in the month of December... Looking ahead, robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4 per cent." He said the MPC will remain watchful of food inflation.

Forex reserve

India's forex reserve at all-time high at $645.6 billion.

Current Account Deficit

In his speech, the governor highlighted that India's Current Account Deficit (CAD) for FY25 is expected to remain at a level that is both viable and eminently manageable.

Repo Rate

The repo rate stands as the benchmark interest rate at which the RBI extends liquidity through the liquidity adjustment facility (LAF) to banks. This liquidity is provided against the backing of government and other securities that are deemed acceptable by the RBI.

The government has tasked the RBI with the responsibility of maintaining CPI inflation within a range of 2 per cent to 6 per cent, with the target set at 4 per cent.