The Reserve Bank of India (RBI) Governor, Shaktikanta Das, on Wednesday announced the repo rate.
MPC decided to keep the policy rate unchanged at 6.5% with a majority of 5 out of 6 members, the Governor said.
The MPC decided unanimously to change stance to neutral and to remain unambiguously focussed on endurable alignment of inflation with growth, he added.
The Governor said the flexible inflation targeting has served us well over the years, brought an era of price stability.
GDP growth:
On the GDP number, the Governor said the real GDP growth is projected at 7.2% for FY24-25.
For Q2 FY24-25, real gdp growth is projected at 7%, Q3 at 7.4% and Q4 at 7.4%, the risks are evenly balanced, he said.
Real GDP growth for Q1 FY25-26 is projected at 7.3%.
He said the PMI at 56.5 for September remained elevated, services sector continues to grow at a strong pace. On demand side, rural demand is trending upwards while urban demands continue to hold strong.
CPI Inflation:
Das in his speech has highlighted that the recent uptick in food and metal prices if sustained can add to the upside risks of CPI inflation.
He said the inflation horse has been brought to the stable.
Narrating the projection, he said the CPI Inflation for FY24-25 is projected at 4.5%. CPI
Inflation for Q2 is projected at 4.1%, Q3 at 4.8% and Q4 at 4.2%.
Further, the CPI inflation for Q1 FY25-26 is projected at 4.3%, the risks are evenly balanced, he added.
Governor Das on the exposure in terms of unsecured lending said, “RBI is closely monitoring the incoming information and will take measures if necessary, banks and NBFCs need to closely assess their exposure in these areas, underwriting standards have to be robust, continued attention also needs to be given in cyber security, mule accounts, etc.”
Notably, the repo rate, at which the central bank lends short-term funds to banks, stands at 6.5%. The central bank has kept it unchanged since April 2023.
Recently, the Union Government has reconstituted MPC by appointing three new external members.
Professor Ram Singh, Director of the Delhi School of Economics; economist Saugata Bhattacharya; and Dr. Nagesh Kumar, Director and Chief Executive of the Institute for Studies in Industrial Development, are the new additions.
For the October MPC, Saugata Bhattacharya, Professor Ram Singh, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shaktikanta Das voted to keep the policy repo rate unchanged at 6.50% while Dr. Nagesh Kumar voted to reduce the policy repo rate by 25 basis points.
Further, Dr. Nagesh Kumar, Saugata Bhattacharya, Professor Ram Singh, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shaktikanta Das voted for a change in stance from withdrawal of accommodation to ‘neutral’ and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth.
