Repo Rate Remains Steady at 6.5%, Per RBI Monetary Policy

In a crucial announcement, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep the repo rate at 6.5%

In a crucial announcement, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep the repo rate at 6.5%. This decision, which came right after the Interim Budget that was unveiled on February 1, 2024, represents the rate’s sixth straight stay at the same level. In order to strike a balance between reining in inflation and promoting economic expansion, the RBI’s position remains centered on the removal of its accommodating monetary policy. The MPC’s upcoming meeting is set for April 3–5, 2024.

Decision on Repo Rates
During a recent meeting that ended on February 8, 2024, five of the six members of the MPC voted to maintain the current repo rate. The move was largely expected by financial experts, who had predicted that the rate would stay at 6.5%. RBI Governor Shaktikanta Das stressed the need of monetary policy having a disinflationary posture in order to guarantee that inflation gradually approaches the objective.

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RBI Repo Rate are as under

Policy Repo Rate: 6.50%

Standing Deposit Facility (SDF): 6.25%

Marginal Standing Facility Rate:  6.75%

Bank Rate:  6.75%

Fixed Reverse Repo Rate: 3.35%

CRR: 4.50%

SLR: 18.00%

Growth and Inflation Forecasts
The Reserve Bank of India (RBI) has kept its inflation projection for the fiscal year 2023–2024 at 5.4%. A detailed prognosis for that year projects Consumer Price Index (CPI) inflation of 4.5%. This comprehensive estimate comprises quarterly projections, with the first quarter’s estimate being 5% and the fourth quarter’s estimate being 4.7% at the end of FY 2024–2025.

RBI projects real GDP growth of 7 pc for FY’25 with risks evenly balanced.

Real GDP growth for FY25 is projected at 7%

For FY24Q1 is projected at 7.2%

For FY24Q2 is projected at 6.8%

For FY24Q3 is projected at 7%

For FY24Q4 is projected at 6.9%

Important Statements and Regulations
Along with the MPC’s decision, a number of noteworthy announcements have been made to support financial stability and boost the economy:
India’s foreign exchange reserves, which are now valued at $622.5 billion, are thought to be sufficient to cover all of the country’s foreign debt.
Loan openness: In order to improve consumer protection and openness, lenders are now obliged to furnish “key fact statements” for loans made to retail and MSME borrowers.
Targets for GDP and Inflation: The RBI is still on guard, working to meet a sustainable 4% inflation target while forecasting balanced real GDP growth.

Who makes up the RBI MPC membership?
Six people make up the RBI MPC, including RBI personnel and persons from outside the organization. The RBI Governor, two deputy governors, and three outside members are included in this.
Michael Debabrata Patra, Deputy Governor of the Reserve Bank of India; Shaktikanta Das, Governor of the Reserve Bank of India; Jayanth R. Varma, Professor of the Indian Institute of Management Ahmedabad; Dr. Shashanka Bhide, Senior Advisor, National Council of Applied Economic Research; and Rajiv Ranjan, Officer of the Reserve Bank nominated by the Central Board, Member.