Mumbai: The Reserve Bank of India (RBI) has announced the continuation of the repo rate at 6.5%, marking the sixth consecutive instance of maintaining this rate unchanged. The decision was reached with a majority vote of 5:1 by the six-member Monetary Policy Committee (MPC) during its final meeting of the current fiscal year. This decision comes as retail inflation persists above the RBI’s target of 4 percent.
The repo rate, serving as the interest rate at which banks borrow funds from the RBI to address short-term liquidity imbalances, remains unchanged amidst prevailing economic conditions.
In the bi-monthly monetary policy announcement made today, RBI Governor Shaktikanta Das disclosed that the Standing Deposit Facility rate remains steady at 6.25%, with the Marginal Standing Facility (MSF) rate and the Bank Rate both maintained at 6.75%. He further projected retail inflation, based on the Consumer Price Index (CPI), to stand at 5.4% for the ongoing fiscal year and to ease to 4.5% in the subsequent financial year.
Governor Das emphasized the robustness of domestic economic activity, with real GDP growth forecasted at 7.3% for the fiscal year 2023-24, marking the third consecutive year of growth above 7%. The RBI has set the real GDP growth projection for the forthcoming financial year at 7%.
While acknowledging challenges such as lower reservoir levels and delayed sowing, Governor noted the resilience of agricultural activity amid lower inflation levels. Additionally, he provided insights into the global economic landscape, indicating a steady growth trajectory for 2024 with regional variations. Despite the recovery in global trade momentum, Das highlighted its initial weakness but anticipated accelerated growth in 2024.
The government has entrusted the RBI with the mandate to maintain retail inflation, based on the Consumer Price Index (CPI), at 4% with a permissible margin of 2% on either side.