RBI Monetary Policy Update: Repo Rate Unchanged at 6.5%, GDP Forecast 7.2%

RBI Governor Shaktikanta Das announced the bi-monthly monetary policy for FY25 on Friday, June 7, 2024. This is the first MPC meeting after the results of the Lok Sabha elections 2024. 

The six-member monetary policy committee headed by the governor decided to keep the repo rate unchanged at 6.5% for the eight consecutive time by majority vote of 4:2. RBI also decided to continue with its stance of withdrawal of accommodation. 

The GDP forecast for the financial year 2025 raised to 7.2%. The quarterly projections for Q1 FY25 at 7.3%, Q2 at 7.2%, Q3 at 7.3%, Q4 at 7.2%. 

The Consumer price index (CPI) for FY25 stays at 4.5%. The inflation forecast for quarter 1 is at 4.9%, quarter 2 is at 3.8%, quarter 3 is at 4.6% and quarter 4 is at 4.5%.

RBI Monetary Policy: Development and Regulatory Policies

In the meeting, RBI decided to review the limit of bulk deposit for scheduled commercial banks, Small Finance Banks and Local area banks. Secondly, the rationalisation of Import and Export regulations under Foreign Exchange Management Act. Also, to set up a digital payments and intelligence platform, Including recurring payments for Fastag, National Common Mobility Card, etc. 

How Markets Reacted to RBI Monetary Policy?

Equity investors celebrated the outcome of the Monetary Policy meeting, as broader market indices rallied more than 2% and closed at Rs 23,290. The bank nifty index also recovered from its day low of Rs 49,080 and gained more than 1%. The Bank Nifty index spot closed at Rs 49,803.

However, the Debt market didn’t react much and stayed sideways. The next trigger for the equity and debt market seems to be Union Budget 2024. Investors are excited to know how the new government will form a fiscal roadmap for the future. 

Also Read | Akum Drugs and Pharmaceuticals Limited IPO: Important things to know