The Reserve bank of India’s (RBI) Monetary Policy Committee (MPC) decided to keep the repo rates unchanged at 6.50 per cent for the fifth consecutive time on Friday, 8 December. The six-member committee voted with a majority of 5 out of 6 members to maintain the "Withdrawal of Accommodation" Stance.
The three-day bi-monthly MPC meeting which began on Wednesday, 6 December, is closely watched by market participants.
In the last four meetings in April, June, August, and October, the RBI kept the repo rate unchanged at 6.50 per cent. The repo rate is the interest rate at which the RBI lends to other banks.
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In October, the retail inflation stood at 4.87 per cent, well within the RBI’s limit of 4 per cent with margin of 2 per cent on both sides.
The central bank raised the real GDP projection for FY24 at 7 per cent up from 6.5 per cent earlier. Real GDP for Q1FY25 is projected at 6.7 per cent, for Q2FY25 at 6.5 per cent, and for Q3FY25 at 6.4 per cent.
The retail inflation (CPI) forecast for fiscal 2024 was kept unchanged at 5.4 per cent.
Governor Das said that the global economy continues to remain fragile due to elevated debt levels, lingering geopolitical tensions and extreme weather conditions.
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The marginal standing facility (MSF) and standard deposit facility (SDF) rates will remain unchanged at 6.75 per cent and 6.25 per cent, respectively.
Das said the that there has been a higher utilization of both MSF and DSF facility by the banks and address the situation the RBI has proposed to allow reversal of liquidity facilities in both MSF and DSF during weekends and holidays with effect from 30 December 2023.
The RBI has also introduced a unified regulatory framework on connected lending for all regulated entities.
In addition, the UPI payment limit for hospitals and education payments has been revised higher to Rs 5 lakh per transaction from the limit of Rs 1 lakh per transaction.
