RBI Monetary Policy: Governor Shaktikanta Das-Led MPC Keeps Repo Rate Unchanged At 6.5%

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) held its first meeting of the year on 6 February 2024. Headed by RBI Governor Shaktikanta Das, the six-member committee announced to keep the repo rate unchanged at 6.5 per cent and maintains the 'Withdrawal of accomodation' stance.

The RBI has maintained the repo rate at 6.5 per since February 2023 as inflation has largely remained within the target range of 2-6 per cent. The policy outcome was on the expected lines at a five-to-one majority for both policy rate and stance.

In addition, MPC kept the Marginal Standing Facility (MSF) and Standing Deposit Facility (SDF) rates unchanged at 6.75 per cent 6.25 per cent respectively.

“On one hand, the odds of soft landing have increased with Inflation moving closer to the target and growth holding up better than expected in major advanced and emerging market economies,” Shaktikanta Das said.

Governor Das said the uncertainty in food prices continued to impinge on headline inflation. MPC remains resolute on containing inflation at the target of 4 per cent. “Global growth is expected to remain steady in 2024,” he added.

Real GDP growth for FY25 has been projected at 7 per cent.

CPI Inflation has moderated to 5.5 per cent in April-December 2023, from high of 6.7 per cent in FY23. Headline inflation to FY24 is projected at 5.4 per cent, with projection for the ongoing fourth quarter FY24 at 4.5 per cent. CPI Inflation for FY25 is projected at 4.5 per cent.

Retail inflation in the ongoing financial year has declined after hitting a peak of 7.44 per cent in July 2023. In December 2023, it was at 5.69 per cent close to the RBI’s comfort zone of 4-6 per cent. The government has directed the central bank to ensure the Consumer Price Index-based retail inflation remains at 4 per cent with a margin of 2 per cent on either side.