RBI keeps repo rate unchanged, hikes FY25 GDP growth forecast

Wednesday 12th June 2024 07:40 EDT

In its second meeting for FY25 and the first after the general elections, the Reserve Bank of India (RBI) announced that the benchmark repo rate will remain unchanged at 6.5 per cent for the eighth consecutive time. The decision was taken by the RBI's six-member Monetary Policy Committee (MPC) by a 4:2 majority.
The RBI raised its GDP growth forecast for FY25 to 7.2 per cent from 7 per cent earlier, while the inflation forecast was retained at 4.5 per cent.

Speaking about the disinflationary trend in the core Consumer Price Index (CPI) inflation for the 11th consecutive month, Das highlighted that high food inflation offset the overall gains.
However, assuming a normal monsoon based on the weather department's forecasts, Das said that the CPI for FY25 is projected at 4.5 per cent. The quarter-wise breakups for CPI given by Das are 4.9 per cent in the first quarter, 3.9 per cent in the second quarter, 4.6 per cent in the third quarter, and 4.5 per cent in the fourth quarter.
The RBI governor further said that "the central bank is committed to bringing inflation back to the target of 4 per cent on a durable basis." On the Current Account Deficit (CAD) in Q4 FY24, Das said, "the current account deficit is expected to remain well within its sustainable level in FY25." Das said that private consumption is recovering with steady discretionary spending in urban areas. He added that investment activity continues to gain traction.

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