The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) opted to maintain the policy repo rate unchanged at 6.50% during its meeting on April 5. This decision marks the 7th consecutive time the rates have remained steady.
In its efforts to control inflation and support growth, the MPC emphasized the importance of gradually withdrawing accommodation measures.
RBI Governor Shaktikanta Das, addressing the media after the MPC meeting, highlighted the robust momentum in the domestic economy, with real GDP expanding by 7.6% in the fiscal year 2023-24. He emphasized the significant contribution of manufacturing and construction activities to this growth.
Looking ahead, Shaktikanta Das expressed optimism about various sectors, including agriculture, manufacturing, and services, projecting a GDP growth rate of 7.0% for the fiscal year 2024-25. However, he acknowledged the risks posed by geopolitical tensions and climate-related disruptions.
Regarding inflation, Shaktikanta Das stressed the need for continued moderation to align with the target of 4% CPI inflation. Despite a slight softening, food inflation remained a concern, driven primarily by price increases in vegetables, eggs, meat, and fish.
The MPC projected CPI inflation for the fiscal year 2024-25 at 4.5%, with the risks evenly balanced. Recognizing the importance of sustained disinflation, the MPC opted to maintain the policy repo rate at 6.50%.
Shaktikanta Das affirmed the MPC’s commitment to actively manage monetary policy to anchor inflation expectations and ensure price stability conducive to sustained economic growth.
Overall, the MPC’s decision reflects a cautious approach aimed at balancing inflation control with support for economic growth.
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