INSUBCONTINENT EXCLUSIVE:
The RBI kept the repo rate unchanged at 6.5 per cent for the tenth consecutive meeting, with a majority vote of 5-1 (Photo: PTI)4 min read
Last Updated : Oct 09 2024 | 10:32 AM IST
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Wednesday, October 9,
kept the repo rate unchanged at 6.5 per cent for the tenth consecutive meeting, with a majority vote of 5-1
The MPC, however, unanimously decided to change its stance to "neutral" from the earlier "withdrawal of accommodation".
The MPC began its
three-day meeting on October 7 to discuss the fourth bi-monthly monetary policy for FY25.Click here to connect with us on WhatsApp
Five
out of six MPC members voted in favour of maintaining the current rate.
Consequently, Das announced that the standing deposit facility
(SDF) rate was kept at 6.25 per cent, while the marginal standing facility (MSF) rate and the bank rate remained at 6.75 per
However, downside risks persist due to geopolitical conflicts, financial market volatility, and elevated public debt
allows the RBI to adjust interest rates according to inflation trends, unlike the previous approach of withdrawing accommodation, which
For FY25, the RBI kept its gross domestic product (GDP) projection unchanged at 7.2 per cent
The Q2 projection also remained at 7.2 per cent, as before
However, the projection was raised for Q3 to 7.4 per cent from 7.3 per cent and for Q4 to 7.4 per cent from 7.2 per cent.
For Q1 of FY26,
the RBI expects GDP growth at 7.3 per cent, up from the earlier 7.2 per cent.
Q1FY25: 6.7 per cent
Q2: 7.2 per cent
Q3: 7.4 per cent
Q4:
7.4 per centQ1FY26: 7.3 per cent
Das highlighted that manufacturing is showing signs of slowing down while the services sector remains
cent for FY25, the same as previously forecast
On a quarterly basis, the Consumer Price Index (CPI) inflation forecast is projected at 4.1 per cent in Q2, expected to rise to 4.8 per cent
4.8 per cent
Q4: will come down to 4.2 per cent
Q1FY26: projected at 4.3 per cent
Meanwhile, the RBI said that the headline
inflation declined sharply to 3.6 in July and 3.7 per cent in August from the earlier 5.1 per cent in June
"Going forward, the September inflation print may see a significant pick-up as base effects turn adverse and food prices register an upturn
Food inflation, however, is expected to ease by Q4:2024-25 on better kharif arrivals and rising prospects of a good rabi season," Das
Current and anticipated inflation trends contributed to the change in stance
The central bank highlighted its efforts to curb inflation, successfully bringing it within the target range.Governor Das indicated that the
September CPI is likely to see a sharp increase, driven by unfavorable base effects and rising food prices
He forecasted that headline inflation would gradually ease in the fourth quarter, but warned that unexpected weather events and geopolitical
tensions remain significant risks that could push inflation higher
He added that the recent rise in food and metal prices, if it continues, could heighten the upward risks to Consumer Price Index (CPI)
inflation.
Who are the newly appointed RBI MPC members?
In early October, the central government appointed three new external members to
the RBI's six-member Monetary Policy Committee
The new members include economist Saugata Bhattacharya, Nagesh Kumar, Director and Chief Executive of the Institute for Studies in
Industrial Development, and Ram Singh, Director of the Delhi School of Economics at the University of Delhi
They now serve alongside Governor Shaktikanta Das, Executive Director Rajiv Ranjan, and Deputy Governor Michael Debabrata Patra on the
committee.
Bhattacharya, Kumar, and Singh replaced outgoing members Ashima Goyal, Shashanka Bhide and Jayanth R
Varma.First Published: Oct 09 2024 | 10:31 AMIST
