Policy repo rate unchanged at 6.50%

Reserve Bank of India (RBI) has announced its decision to keep the interest rate intact and the policy repo rate unchanged. Banks are also permitted to issue Rupay prepaid forex cards for Indians travelling abroad.

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The RBI Monetary Policy Committee (MPC) unanimously decided that the policy repo rate, under the liquidity adjustment facility (LAF) shall remain unchanged at 6.50%. It has been decided that the standing deposit facility (SDF) rate & the marginal standing facility (MSF), and the Bank Rate will also remain unchanged at 6.25% and 6.75% respectively.

RBI has slightly lowered its inflation projection for the current financial year to 5.1%, from the earlier estimate of 5.2%. RBI Governor Shaktikanta Das said that retail inflation has remained below 6% for the last two years.

The CPI inflation is projected at 5.1% for 2023-24 with Q1 at 4.6%, Q2 at 5.2%, Q3 at 5.4% and Q4 at 5.2%. 

The MPC has decided to remain focused on the ‘withdrawal of accommodation’ to ensure that inflation progressively aligns with the target while supporting growth.

The governor also said, “Domestic demand condition remains supportive of growth and also the demand in rural areas is on the revival path.” He added that India’s economy grew at 6.1% in the fourth quarter of 2022-23, pushing up the annual growth rate to 7.2%, as against the previous projection of 7%.

The real GDP growth rate in 2023-24 is projected by RBI to be at 6.5%; with Q1 at 8.0%, Q2 at 6.5%, Q3 at 6.0%, and Q4 at 5.7%. The growth is expected to be supported by higher Rabi crop production, normal monsoon, private consumption, capital expenditure, and robust credit growth. All these factors are expected to foster investment activity.

RBI Governor Shaktikanta Das informed that the Rupay debit and credit cards are gaining increased acceptance across the world. He said that the banks are now permitted to issue Rupay prepaid forex cards for Indians travelling abroad.

He said that the Rupay prepaid Forex cards will expand the payment options for Indians going abroad. The Rupay cards will also be enabled for issuance in foreign jurisdictions, he added.