RBI Monetary Policy 2024: Repo Rate at 6.5%, Projected Real GDP Growth For FY25 at 7%

RBI’s Monetary Policy Committee Meeting 2024 was completed on February 8, 2024, and Governor Shaktikanta Das revealed the committee decision in a press release. Many important decisions were taken and one of those is regarding the repo rate which kept unchanged at 6.5% for the sixth time in the row.

The rate increase cycle was paused in April last year, after six consecutive rate hikes aggregating to 250 basis points since May 2022. He said MPC will remain watchful for the food inflation so that previous benefits gains must stay.

GDP Growth Projections

RBI projected a GDP Growth rate for FY25 at 7%, which is lower than the 7.3% expansion estimated for the current fiscal. The Governor said, Rural demand continues to gather pace, urban consumption remains strong and the investment cycle is good and coming back to track due to increased capital expenditure.

CPI Inflation Projections

The CPI inflation for FY24 is at 5.4% and FY24 fourth quarter projection is at 4.5%. However, the projections for the next quarter FY25 Q1 is 5%, FY25 Q2 is 4%, FY25 Q3 is 4.6% and FY25 Q4 is 4.7%.

RBI projected retail inflation at 5.4% for the current fiscal, 4.5% for the FY 2024-25 fiscal. In the credit market, the money transmission remains incomplete. Indian Rupee saw a lowest volatility in 2023-24 which is quite good and the exchange rate remained stable.

India’s services export remained resilient during the October – December period of FY24. The domestic financial system remains resilient with a healthy balance sheet. India’s forex reserve at $622.5 billion, comfortable for meeting all foreign obligations.

Broader Stock Market Indices Reaction

After the meeting concluded, the broader stock market indices, Nifty witnessed a selling pressure and slipped below the 21,800 crucial level. Moreover, the sector focused index Nifty Bank also witnessed a sharp sell off and slipped below 45,500 level.