MUMBAI: The Reserve Bank of India on Thursday left repo rate (at which the central bank lends money to commercial banks) unchanged at 6.5%, making it the second pause in a row. The RBI had pressed the pause button in April after six consecutive rate hikes aggregating 250 bps since May 2022.
Announcing the monetary policy committee’s decision, which was in line with market expectations, RBI governor Shaktikanta Das said the central bank is committed to bringing down inflation to the target level of 4%.
“Given the uncertainties, we need to maintain Arjuna’s eye on the evolving inflation scenario. Let me re-emphasise that headline inflation still remains above the target and being within the tolerance band is not enough,” he said.
Prices have started falling in the past few months with retail inflation dropping to an 18-month low of 4.7% in April and 5.66% in March. In the current financial year, however, RBI expects inflation to remain above 4%, at 5.1%.
Das said the economy is resilient despite pressure from global factors. “Domestic demand conditions remain supportive of growth on the back of improving household consumption and investment activity,” he added.
Inflation
RBI moderates its projection for retail inflation in 2023-24 to 5.1% from 5.2% forecast in April
GDP
FY24 economic growth projection retained at 6.5%, on the back of supportive domestic demand conditions
GDP growth in the first quarter of FY24 is pegged at 8%, Q2 6.5%, Q3 6%, and Q4 at 5.7%