1. RBI has decided to maintain the policy repo rate at 6.50 per cent following the recent MPC meeting.
2. This decision is in line with RBI’s objective of achieving the medium-term CPI inflation target of 4 per cent.
3. The unchanged repo rate reflects RBI’s focus on balancing inflation and economic growth.
New Delhi, Feb 08: The Reserve Bank of India (RBI) has announced its decision to keep the policy repo rate unchanged at 6.50 per cent, following the recent Monetary Policy Committee (MPC) meeting held from February 6 to 8, 2024.
The decision to maintain the repo rate aligns with the RBI’s goal of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent while supporting economic growth.
Accordingly, the standing deposit facility (SDF) rate remains at 6.25 per cent, while the marginal standing facility (MSF) rate and the Bank Rate are retained at 6.75 per cent.
The MPC’s focus remains on withdrawing accommodation to ensure that inflation gradually aligns with the target while sustaining growth, reflecting the assessment of the current and evolving macroeconomic situation, both globally and domestically.
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Globally, the outlook suggests steady growth in 2024, albeit with fluctuations in inflation and financial market sentiments.
Domestically, economic activity is strengthening, with real gross domestic product (GDP) expected to grow by 7.3 per cent in 2023-24, supported by robust investment activity and strong performance in the manufacturing and services sectors.
Looking forward, the RBI foresees continued economic recovery in 2024-25, driven by factors such as improved household consumption, private investment, and government expenditure. However, risks persist, including geopolitical tensions and volatility in international financial markets.
Regarding inflation, the RBI anticipates moderation, considering factors such as rabi sowing surpassing last year’s levels and effective supply-side responses to food price pressures. Despite volatility in crude oil prices, the projection for CPI inflation for 2023-24 stands at 5.4 per cent, with a downward trajectory expected for the following year.
The MPC’s decision to maintain the policy repo rate received support from most members, with one member voting for a reduction in the repo rate by 25 basis points.
The minutes of the MPC’s meeting will be published on February 22, 2024, with the next meeting scheduled for April 3 to 5, 2024.
