RBI maintains Repo Rate at 6.5% in its 2nd bi-monthly monetary policy meeting of FY24

Digital Desk: The Reserve Bank of India (RBI) held repo rates constant at 6.5 percent on Thursday. The central bank's Monetary Policy Committee (MPC) unanimously opted to take an ongoing pause in its second bi-monthly monetary policy meeting of FY24, following a rate hike in the previous six in-order policies.

On June 6-8, the RBI held its Monetary Policy Committee meeting. A year is divided into six bimonthly reviews of monetary policy by the central bank. There are also out-of-cycle reviews, in which the central bank holds extra sessions in emergencies.

Introducing the Monetary Policy, RBI Governor Shaktikanta Das stated that the MPC will continue to take policy actions in a timely and appropriate manner to keep inflation expectations firmly anchored. "Headline inflation is above the target of 4% and is expected to remain so for the rest of the year," he added.

Shaktikanta went on to say that the Indian economy and financial industry are strong and resilient in the face of extraordinary global headwinds. He went on to say that the speed of global economic activity will slow down monitoring of the geopolitical situation and that keeping a close eye on evolving inflation is critical.

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The RBI Governor continued clarifying that the MPC has opted to keep its focus on withdrawing policy accommodation.

The Central Bank has reduced its retail inflation forecast for FY24 from 5.2 percent to 5.1 percent. "RBI retains growth projection at 6.5 percent for FY'24, expects 8 percent growth in Q1, 6.5 percent in Q2, 6 percent in Q3, and 5.7 percent in Q4," said RBI Governor.

The RBI has also reduced its fiscal inflation forecast for FY24 from 5.2 percent to 5.1 percent. The RBI Governor stated that GDP growth in the first quarter of this fiscal year is likely to be 8%.