Reserve Bank of India has kept repo rate unchanged at 6.5 percent for the sixth time in a row. The six-member monetary policy committee (MPC) voted by 5:1 majority to keep the repo rate unchanged in its last meeting of the current financial year as retail inflation continues to be above its target of 4 percent.
The repo rate is the interest rate at which banks draw funds from RBI to overcome short-term liquidity mismatches. Announcing the bi-monthly monetary policy today, RBI Governor Shaktikanta Das said, the Standing Deposit Facility rate remains at 6.25 percent and the Marginal Standing Facility (MSF) rate and the Bank Rate at 6.75 percent. He has projected the retail inflation based on the Consumer Price Index at 5.4 percent in the current fiscal and 4.5 percent during the next financial year.
The RBI Governor highlighted that domestic economic activity remains strong and real GDP growth is 7.3 % for the year 2023-24. This will be the third successful year for the GDP to grow above 7 percent. RBI has pegged real GDP growth for the next financial year at 7 percent.
The RBI Governor highlighted that agriculture activity is also holding up well, despite lower inflation, lower reservoir level and delayed sowing. The Governor also informed that global growth is expected to remain steady in 2024 with heterogeneity across the region. The global trade momentum remains week. It is showing signs of recovery and is likely to grow faster in 2024, Mr Das said.
The government has mandated the central bank to ensure the retail inflation based on the Consumer Price Index (CPI) remains at 4 percent with a margin of 2 percent on either side.