RBI MPC meeting: Reserve Bank of India kept repo rate unchanged at 6.5%

RBI MPC: Going by the expectations of the Street, the Reserve Bank of India in its bimonthly monetary policy meeting (MPC) kept its key interest rate ( repo rate) unchanged for 7th time in a row at 6.50 per cent, the RBI governor Shkatikanta Das said on Friday. “ The repo rate is unchanged at 6.5 per cent, the standing deposit facility rate is at 6.25 per cent, and the marginal standing facility rate is at 6.75 per cent,” Das told in an MPC briefing.  This was the first monetary policy meeting in the fiscal year FY25. The central bank last hiked the repo rate to 6.5 per cent per cent was in February 2023. 

Growth Forecast

"Growth has continued to sustain its momentum, surpassing all projections. Headline inflation has eased to 5.1 per cent during both January and February, and this has come down to 5.1 per cent in these two months from the earlier peak of 5.7 per cent in the month of December. Looking ahead, robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4 per cent," RBI Governor Shaktikanta Das said today. Putting a stop to all the expectations of revising the growth forecast, Das said, “ The real GDP growth projection for FY25 is at  7 per cent and quarterly the growth forecast in Q1 is at 7.1  per cent, Q2 at 6.9 per cent and Q3 and Q4 each at 7 per cent.” 

Inflation Forecast

Talking about inflation RBI governor added, " “Two years ago, when CPI inflation peaked at 7.8 per cent in April 2022, the elephant in the room was inflation. The elephant has now gone out for a walk and appears to be returning to the forest. We'd like the elephant to return to the forest and remain there on a durable basis. The CPI inflation must continue to moderate and align with the target on a durable basis. Till this is achieved, our task remains unfinished.” Thus the apex bank kept the inflation projection in FY25 at 4.5 per cent. 

The RBI governor reiterated the apex bank's commitment to align inflation with its mid-term target and said that the MPC has decided to be resolute in its commitment to align CPI to its target.  According to Das, in the last few months, growth and inflation dynamics have played a favourable.