RBI MPC: Repo Rate Remained Unchanged at 6.5%, Inflation Projection for FY25 at 4.5%

The RBI MPC meeting held on Friday, April 5, 2024, made some big announcements regarding the repo rate, GDP, and Inflation projection for FY25. 

RBI has not changed the repo rate and keeps it unchanged at 6.5% as retail inflation is higher than the set target of 4%. This is the seventh MPC meeting in which the RBI has kept the repo rate unchanged. 

The standing deposit facility rate at 6.25%, and the marginal standing facility rate and bank rate at 6.75%.

In the RBI MPC meeting, they projected India’s Real GDP growth for FY25 to be 7%. However, it cut down the GDP projection for Q1 FY25 to 7.1% from 7.2% projected earlier. 

While, GDP projection for Q2 FY25 has raised 6.9% from 6.8% earlier. For Q3, FY25, the projection remained unchanged at 7% and for Q4 FY25 the target was raised to 7% from 6.9% earlier. 

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RBI MPC: Retail CPI Inflation Forecast

The CPI Inflation forecast for FY25 at 4.5%. The quarter 1 projection at 4.9%, Q2 at 3.8%, Q3 at 4.6% and Q4 at 4.5%.

The Reserve Bank of India said, food price uncertainties continue to weigh on the inflation trajectory going forward. However, with the rural demand catching up, consumption is expected to support economic growth at FY25.

The strong rural demand, moderating inflationary pressures and sustained momentum in the manufacturing and service sector boost private consumption.

Other Key Highlights of RBI MPC Meeting

RBI will launch a mobile app to facilitate retail participation in government securities. The central bank may also allow cash deposits in banks through UPI. The central bank permits non-bank payment system operators to offer CBDC wallets.

The Net inflows by the foreign portfolio investors stood at $41.6 billion during 2023 to 2024. This is the second highest FPI inflow after 2014-15.

The Indian rupee (INR) remained range bound as compared to its emerging market peers. However, the Indian Rupee is most stable among major currencies in FY24.

The Next RBI policy meeting is scheduled from June 5 2024 to June 7 2024.

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