New Delhi (05.04.2024): The Reserve Bank of India (RBI) Governor Shaktikanta Das today announced the first monetary policy of 2024-25 fiscal. The RBI decided to keep the key policy repo rate unchanged at 6.5 per cent for the seventh consecutive time. The RBI has projected India’s real GDP growth rate for FY ‘25 at 7 per cent. CPI inflation for FY25 is estimated at 4.5 per cent.

• MPC will remain resolute in its commitment to align inflation to RBI's target of 4%.
• Global debt-to-GDP ratio remains high, may have spill-over effect on emerging economies.
• MPC decides to remain focused on withdrawal of accommodative stance.
• Rural demand catching up, consumption expected to support economic growth in FY25.
• Operating inflationary pressure, sustained momentum in manufacturing, services sectors should
• boost private investment.
• India's GDP growth for FY25 projected at 7%.
• Global growth remains resilient; recent uptick in crude oil prices needs to be closely monitored.
• Continuing geopolitical tensions pose upside risks to commodity prices.
• Indian rupee has largely remained range-bound among emerging market peers, exhibited lowest
• volatility in 2023. India continues to be largest recipient of remittances.
• High, persisting food inflation could unhinge anchoring of inflationary expectations.
• Elephant in the room (inflation) appears to have gone out for a walk, we want it to remain in forest.
• RBI retains inflation forecast at 4.5% with risk evenly balanced assuming normal monsoon for
• current fiscal. Food inflation continues to show considerable volatility.
• RBI will remain nimble, flexible in its liquidity management.
• Our effort is to ensure price stability on an enduring basis.
• It is our prime focus to build up a strong buffer in form of Forex reserves. India's Forex reserves
• reached all-time high of $645.6 billion as of March 29.
• Banks, NBFCs, other financial institutions must continue to give highest priority to governance.
• Monetary policy transmission continues to be 'work in progress' in the credit market.
• RBI to soon notify scheme for trading on sovereign green bond at International Financial Services
• Center.
• RBI proposes to allow cash deposits through UPI.
• RBI permits small finance banks to use interest rate futures for proprietary hedging.
• Upcoming decade going to be transformational journey as RBI moves towards 100 years of its
• establishment.
• Permit use of third-party apps to make PPI prepaid payment instrument for UPI. Distribution of
• CBDC to be allowed via non-bank payment system operators.

RBI maintained the Repo Rate at 6.5% following a status quo policy:

The Monetary Policy Committee (MPC) of the Reserve Bank of India has resolved to maintain the repo rate at 6.5% following a status quo policy and to continue concentrating on the removal of accommodation while promoting development. This decision aims to ensure financial stability, check inflationary pressures, and promote continued economic growth in India.The decision was taken keeping in view the favorable growth inflation dynamics and easing headline inflation. MPC remains vigilant given the current circumstances to ensure anchoring of inflation expectations and continued higher growth trajectory.

(Courtesy: Power Gilt Treasuries Inc)