RBI Meeting June 2024: On the third day of the RBI Monetary Policy Committee (MPC) meeting, the central bank kept the repo rate unchanged at 6.5% for the eighth time in a row.
In its first policy meet after the Lok Sabha election results 2024, the RBI Governor headed the six-member Monetary Policy Committee decided to continue with its stance of ‘withdrawal of accommodation’. The central bank has raised its GDP growth forecast for FY25 to 7.2% from 7% earlier and retained the FY25 inflation forecast at 4.5%. Recently, official data showed India’s GDP grew at a higher-than-expected rate of 7.8% in the January-March quarter, supported by growth in its key manufacturing sector.
The RBI Governor Shaktikanta Das said that the MPC is vigilant to any upside risks to inflation, particularly from food inflation, which could possibly derail the path of disinflation. In view of this, the policymakers have remained disinflationary and resolute in their commitment to aligning inflation to the target of 4.0% on a durable basis. The Governor said, “Central banks remain steadfast and data-dependent in their fight against inflation. Market expectations regarding the timing and pace of interest rate cuts are also changing with incoming data and central bank communication.”
Das expressed optimism that the forecast of above normal southwest monsoon by the India Meteorological Department (IMD) is expected to boost kharif production and replenish the reservoir levels. He said, “Strengthening agricultural sector activity is expected to boost rural consumption.”
“The healthy balance sheets of banks and corporates; government’s continued thrust on capex; high capacity utilisation; and business optimism augur well for investment activity,” he added.
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Other key takeaways from RBI’s June 2024 Policy Meeting Include:
- The repo rate remains the same at 6.5%
- Real GDP growth for FY25 to 7.2%, up from 7%
- The RBI has retained the inflation forecast for this fiscal year unchanged at 4.5%.
- India’s forex reserves rose to a record high of $651.5 billion as of May 31,
- Further, the Standing Deposit Facility (SDF) rate has been kept at 6.25%, and Marginal Standing Facility (MSF), bank rate stands at 6.75%.
- RBI has proposed creating a digital payments intelligence platform for real-time data sharing across the system
- The threshold of bulk deposits in banks has been raised to Rs 3 crore from Rs 2 crore earlier.
- The RBI Governor said that interest rates on small-value loans in some microfinance institutions and NBFCs are high and appear to be usurious.
