RBI holds steady with repo rate unchanged at 6.5%

The RBI’s Monetary Policy Committee (MPC) has kept the repo rate unchanged at 6.5% for the ninth consecutive time in its third bi-monthly meeting of the current fiscal year. The decision, approved by a 4:2 vote, reflects the RBI’s cautious approach as it continues to withdraw its accommodative stance while managing inflation risks. The RBI maintained its growth forecast at 7.2% and the Consumer Price Index inflation prediction at 4.5% for FY25, assuming normal monsoon conditions. 

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The Reserve Bank of India’s Monetary Policy Committee (MPC) has decided to keep the repo rate at 6.5% for the ninth consecutive meeting. This decision was announced by RBI Governor Shaktikanta Das in the current fiscal year’s third bi-monthly monetary policy, which was approved by a 4:2 vote. The MPC also decided to maintain the withdrawal of accommodation.

The RBI has kept the benchmark interest rate at 6.5% for the ninth time in a row. The RBI has decided to continue withdrawing its accommodative monetary policy stance.

The Reserve Bank of India has maintained its growth forecast for the current fiscal year at 7.2%. The 4.5% CPI inflation prediction for FY25 is likewise kept intact. MPC cannot afford to ignore consistently high food inflation since it could have unintended consequences. It also should not get comfortable just because core inflation has significantly decreased.

In FY25, retail inflation is predicted to be 4.5%, assuming a regular monsoon. The overall trajectory of inflation is decreasing; further slowdowns are anticipated, although caution is advised. The current account deficit is anticipated to remain within a manageable range. FDI flows increased in FY25, with gross FDI rising by 20% from April to June.

The Rs 5 lakh UPI tax payment limit replaced the Rs 1 lakh cap. The RBI suggests actions to expedite check clearance to a few hours. As of August 2, India’s foreign reserves had reached a record high of US$ 675 billion. The Indian financial system is still strong and resilient because of its overall macroeconomic stability. Growth and inflation are balancing out, but we still need to be on the lookout for rising food prices.