RBI MPC: Repo Rate Unchanged at 6.5%

The Reserve Bank of India (RBI) in its monetary policy committee (MPC) meet on April 5 has kept the key repo rate unchanged at 6.5 percent. This is the seventh consecutive time the Central Bank has kept key interest rate unchanged.

In its first meeting of FY 25, the rate-setting panel left the stance unchanged as withdrawal of accommodation. The decisions were takes with a 5:1 majority.

GDP Growth Forecast

The RBI Governor, Shaktikanta Das also announced that there will be no changes in the GDP growth forecast for FY25. The GDP growth estimate was retained at 7 percent for the current fiscal year.

Domestic Growth

According to RBI Governor Das, domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and improving global environment. The second advance estimates (SAE) placed real GDP growth at 7.6 percent for 2023-24, the third successive year of 7 percent or higher growth, he said.

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Inflation Forecast

On the inflation front, the RBI monetary policy committee sees it at 4.5 percent for FY25. Assuming a normal monsoon this year, CPI (consumer price index-based) inflation for the current year is projected at 4.5 percent, with Q1 at 4.9 percent, Q2 at 3.8 percent, Q3 at 4.6 percent, and Q4 at 4.5 percent.

The Reserve Bank of India Governor in his speech said that MPC will remain resolute in its commitment to align inflation to RBI’s target of 4 percent. He further said that global debt-to-GDP ratio remains high which may have spill-over effect on emerging economies.

Food price uncertainties continue to weigh on the inflation trajectory going forward. “Notwithstanding the cut in petrol and diesel prices in mid-March,24 the recent uptick in crude oil prices needs to be closely monitored. Continuing geo-political tensions also pose upside risk to commodity prices and supply chains,” he added.

Source: RBI