RBI MPC Meeting 2024 Highlights: RBI Maintains Repo Rate, Forecasts Robust Economic Growth

RBI MPC Meeting 2024 Highlights: RBI Maintains Repo Rate, Forecasts Robust Economic Growth

In its Monetary Policy Committee (MPC) meeting on February 8-10, 2024, the Reserve Bank of India (RBI) left the key policy rate, the repo rate, unchanged at 6.5%. This decision was in line with market expectations and followed a series of rate hikes in the previous cycle.

Repo Rate Stays Unchanged

The RBI’s decision to keep the repo rate steady signals its cautious approach towards inflation while supporting economic growth. Despite inflationary pressures easing, the central bank emphasized its commitment to price stability. Governor Shaktikanta Das stated that “the MPC remains focused on bringing inflation down to the target level of 4%.”

Economic Growth Forecast

The RBI revised its GDP growth forecast for fiscal year 2024-25 (FY25) upward to 7.2%, from its previous estimate of 6.8%. This optimism was driven by a robust recovery in domestic demand, the relaxation of pandemic restrictions, and supportive government policies.

Inflation Remains Elevated

While inflation has moderated from its peak, the RBI noted that it remains above the target level of 4%. Supply-side disruptions, geopolitical uncertainties, and rising global food and energy prices continue to exert upward pressure on inflation.

Policy Stance

The RBI maintained its accommodative stance, signaling that it is willing to provide liquidity support to the economy as needed. However, it also cautioned against the risk of excessive liquidity spilling over into inflationary pressures.

Key Highlights

Repo rate unchanged at 6.5%
GDP growth forecast revised to 7.2% for FY25
Inflation remains above the target level of 4%
RBI maintains accommodative stance
Focus on bringing inflation down to the target level

Conclusion

The RBI’s MPC meeting highlighted the central bank’s cautious approach to inflation while supporting economic growth. The decision to keep the repo rate unchanged indicates a balancing act by the RBI in addressing inflationary concerns and fostering economic recovery.