In its first monetary policy review of the financial year 2024-25, the Reserve Bank of India (RBI) has decided to maintain the repo rate at 6.5 per cent for the seventh consecutive time, aligning with market expectations. The monetary policy stance remains focused on the ‘withdrawal of accommodation’.
Governor Shaktikanta Das, leading the RBI Monetary Policy Committee (MPC), announced that the decision to keep the repo rate unchanged was supported by five out of six members. Alongside the repo rate, other key rates such as the Marginal Standing Facility (MSF) and Bank Rates are also held steady at 6.75 per cent, while the Standing Deposit Facility (SDF) remains at 6.25 per cent.
The RBI has maintained its GDP growth projection for the financial year 2024-25 at 7 per cent, in line with its previous forecast. Additionally, the projection for Consumer Price Index (CPI) inflation for the same period stands at 4.5 per cent.
Governor Das emphasized the central bank’s vigilance towards potential upside risks to food inflation. He acknowledged the moderation in inflationary pressures and highlighted the importance of sustained momentum in the manufacturing and services sectors to drive private investment. However, he also cautioned against geopolitical tensions and disruptions in global trade routes as potential headwinds.
Despite the current stable outlook, Governor Das stressed the importance of continued efforts towards monetary policy transmission in credit markets. He reiterated that maintaining financial stability is a shared responsibility among banks, non-banking financial companies (NBFCs), and other financial institutions.
Regarding foreign exchange reserves and remittances, Das noted that India’s forex reserves had reached an all-time high of $645.6 billion as of March 29, with India remaining the largest recipient of remittances. He emphasized the priority of building a robust buffer through forex reserves.
Looking ahead, the RBI projects a real GDP growth of 7 per cent for the financial year 2024-25. Governor Das outlined the quarterly growth expectations, with the June quarter anticipated at 7 per cent, followed by 6.9 per cent in the September quarter, and maintaining 7 per cent growth in the subsequent quarters.
