By tnsh20@gmail.com 
If the RBI does not change the repo rate again, this will be the ninth consecutive time the benchmark rate remains unchanged. RBI governor Shaktikanta Das has announced the Monetary Policy Today.
The Reserve Bank Of India (RBI) governor Shaktikanta Das is announced Monetary Policy Decision today (August 8). The Monetary Policy Committee (MPC) held its third bi-monthly policy meeting for financial year 25 from August 6 to August 8. The RBI-Governor-headed six-member MPC kept the benchmark repo rate at 6.5% and maintained the policy stance of ‘withdrawal of accommodation’.
The MPC may overlook high food inflation if it is transitory but cannot more persistently high food inflation due to its potential spillover effects, says RBI governor Shaktikanta Das. RBI retains FY25 CPI inflation forecast at 4.5%. The quarterly inflation forecast is as follows:-
- Q2FY25 CPI inflation forecast raised to 4.5% from 3.8
- Q3FY25 CPI inflation forecast raised to 4.7% from 4.6%
- Q4FY25 CPI inflation forecast lowered to 4.3% from 4.5%
- Q1FY26 CPI inflation is projected at 4.4 from 4.5%
India’s Foreign Exchange reserve stands at a historic high of 675 billion as of August 2, 2024. India’s external sector remains resilient, says RBL Governor Shaktikanta. The Information is receding gradually across economies while medium-term global growth faces significant challenges, domestic growth remains resilient says RBI Governor Shaktikanta Das.
RBI Policy (GDP Projection):-
RBI retains its real GDP growth projection for FY25 at 7.2% with ‘risks evenly balanced’. The real GDP growth projection for Q1FY25 has been revised downward to 7.1% from earlier estimates of 7.3%. The real GDP forecast for Q2FY25, Q3FY25, and Q4FY25 has been returned at 7.2%, 7.3%, and 7.4%. RBI also projected Q1FY26 GDP growth at 7.2%.
RBI maintains the CPI inflation forecast for FY25 at 4.5%. Q1FY26 inflation forecast at 4.4%.
GDP Growth Projection for FY25 at 7.2% in 2024 year.
- Q1FY25 GDP growth estimates at 7.1%
- Q2FY25 GDP growth estimates at 7.2%
- Q3FY25 GDP growth estimates at 7.3%
- Q4FY25 GDP growth estimates at 7.2%
- Q1FY26 GDP growth estimates at 7.2%
The standing deposit facility (SDF) rate remains at 6.25% and the marginal standing facility (MSF) rate and the bank rate at 6.75%, says RBI Governor Shaktikanta Das. RBI MPC decided to keep the repo rate unchanged at 6.5% announces Governor Shaktikanta Das.
Umesh Kumar Mehta, CEO of Samco Mutual Fund, said, “RBI MPC is in wait-and-watch mode and has kept the interest rates unchanged, waiting for clues from the largest Central Bank of the World, US Federal Reserve, before acting. RBI has taken a safer bet and decided to wait for rate reduction by the third or the fourth quarter of this year, stock markets will continue to consolidate in the meantime”.
Upasana Bhardwaj, chief economist of Kotak Mahindra Bank said, “The RBI expectedly kept rates unchanged. We continue to expect scope for change in stance in the October policy with rate cuts beginning from December”. Currently, UPI transactions are capped at Rs 1 lakh. The RBI has decided to raise the tax payment limit via UPI to Rs 5 lakh per transaction. The Next meeting of the MPC is scheduled to be held between October 7 to 9, 2024.
Vice Chairperson of the Nahar group, Manju Yagnik, Maharashtra said, “The RBI’s decision to maintain a status on the repo rate for the ninth consecutive policy review is a testament to the stability and caution in India’s economic environment. This benefits home buyers and loan borrowers, as it keeps EMI modest and borrowing costs predictable. The real estate sector will benefit from leading to increased sales and investments. It will boost market sentiment and stimulate long-term investment in the housing market”.
Top Highlights From RBI MPC
- RBI MPC decided to maintain the key interest rate at 6.50% for the ninth consecutive time.
- The MPC, retained the ‘withdrawal of accommodation’ to ensure monetary policy stays on risks, Shaktikanta Das said.
- The decision was made with a 4:2 majority during the meeting held from August 5 to 7, the RBI Governor said.
- Shaktikanta Das warned that high food prices remain a concern as food inflation continuous to impact over all inflation.
- The real GDP forecast for FY25 remains at 7.2% with Q1 slightly reduced to 7.2%, Q2 at 7.2%, Q3 at 7.3% and Q4 at 7.2%, Q1fy26 is also projected at 7.2%
- India’s forex reserves reached a record high of 675 billion as of August 2.
- The RBI Governor said that there is a need to carefully monitor mobile tariffs and milk prices.
- Digital lending apps is proposed to prevent unauthorized lending.
- The UPI, tax payment limit is increased from Rs 1 lakh to Rs 5 lakh per transaction.
- Continuous Cheque Clearing is proposed to be introduced.
Shaktikanta Das concluded.” We recognize the challenges along the way, but we have to be patient to finish the job at hand. The following words of Mahatma Gandhi are highly relevant in the current context,” The slightest error of judgment a hasty action or a hasty word may put back the hands of the clock of progress. Policies have, therefore to be cautiously evolved”.
RBI Governor Shaktikanta Das while concluding his speech said “Under the current monetary policy setting, inflation and growth are evolving in a balanced manner, and over all macroeconomic conditions are stable. Growth remains resilient, inflation has been trending downward and we have made progress in achieving price stability, but we have more distance to cover. The progress toward our goal of price stability has been uneven due to large and persistent supply-side shocks, especially in food items. We, therefore, need to remain vigilant to ensure that inflation moves sustainably while supporting growth. This approach would be net positive for sustained high growth”.
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