Recent decisions
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 6.5%
The decision, taken at the MPC’s meeting, marks the eighth time in a row that the policy rate has been put on hold to keep the focus on battling high inflation.
The MPC has revised its GDP growth forecast upwards from the earlier 7% estimate to 7.2% for the financial year 2024-2025
It has also decided to remain focused on withdrawal of accommodation to ensure that inflation does not accelerate, while supporting growth.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth
Higher growth forecast
According to the MPC, high-frequency indicators of domestic activity are showing resilience in 2024-25.
The south-west monsoon is expected to be above normal, which augurs well for agriculture and rural demand but headwinds from geopolitical tensions, volatility in international commodity prices, and geoeconomic fragmentation pose risks to the outlook.
Taking various factors into consideration, real GDP growth for 2024-25 was projected at 7.2% as compared with the earlier projection of 7%
COMMENTS