The Reserve Bank of India (RBI) has adjusted its GDP projection for the fiscal year 2024-2025, increasing it to 7.2% from the previous estimate of 7%. Concurrently, the Consumer Price Index (CPI) inflation forecast stands at 4.5%. These updates were unveiled by RBI Governor Shaktikanta Das during the announcement of policy rates and GDP forecasts.
Governor Das underscored the imperative of a gradual reduction in accommodation to bring inflation in line with the targeted range while fostering economic growth. This prudent approach was reflected in the decision to maintain the Repo Rate at 6.5%. The Monetary Policy Committee (MPC), in a majority decision with four out of six members in agreement, opted to keep the Repo Rate unchanged. Alongside this decision, other key rates such as the standing deposit facility (SDF) rate remained at 6.25%, while the marginal standing facility (MSF) rate and the bank rate stood at 6.75%.
The Governor’s post-policy press conference accentuated the importance of a balanced monetary policy approach. The focus remains on ensuring price stability while supporting economic recovery, a delicate balancing act given the prevailing economic conditions. The decision to maintain the Repo Rate signals the RBI’s cautious stance in navigating the twin objectives of controlling inflation and bolstering economic activity.
The RBI’s revision in GDP forecast reflects a degree of optimism about the economic outlook, aligning with various factors such as improved business sentiments, government initiatives, and global economic recovery trends. However, uncertainties persist, particularly related to global geopolitical developments and domestic factors like food inflation, which remains elevated.
Overall, the RBI’s decision underscores its commitment to fostering sustainable economic growth while maintaining price stability. The cautious approach towards monetary policy adjustments reflects the central bank’s vigilance in navigating the evolving economic landscape, ensuring a balanced and conducive environment for India’s economic trajectory.
