The Reserve Bank of India (RBI) has decided to maintain the repo rate, the key benchmark lending rate, at 6.5% during its bi-monthly monetary policy meeting held on August 6-8, 2024. This marks the ninth consecutive time that the RBI has kept the repo rate unchanged.
RBI Monetary Policy Meeting Key Highlights:
Repo Rate Unchanged: The Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, voted to keep the repo rate steady at 6.5%.
GDP Growth Projection: The RBI has maintained its GDP growth projection for FY25 at 7.2%.
Inflation Concerns: While core inflation has eased, the RBI remains cautious due to rising food prices and global uncertainties.
Policy Stance: The MPC decided to continue with the ‘withdrawal of accommodation’ stance, indicating that further rate hikes are not off the table.
Future Outlook: Analysts predict a possible shift to a neutral stance in the next quarter, depending on the evolving economic situation.
Reasons for Maintaining Status Quo:
Although headline inflation has moderated, the RBI is concerned about the elevated levels of food inflation and its potential spillover effects.
The ongoing global economic volatility and geopolitical tensions pose risks to the domestic growth outlook.
The RBI believes that it is prudent to remain watchful and assess the evolving situation before making any changes to the policy rate.
Overall, the RBI’s decision to maintain the repo rate at 6.5% reflects its cautious approach in the face of persistent inflation and global uncertainties. The central bank remains committed to its primary objective of price stability while supporting sustainable economic growth.