RBI’s Latest Monetary Policy Highlights:
– **GDP Growth Projection**: The Reserve Bank of India (RBI) predicts a robust real GDP growth rate of 7.2% for the fiscal year 2024-25 (FY25). This projection reflects confidence in the economy’s recovery and resilience.
– **Inflation Targeting**: RBI Governor Shaktikanta Das reaffirms the central bank’s commitment to aligning inflation with the target of 4% on a sustainable basis. This indicates a continued focus on price stability to support economic growth.
– **Repo Rate Unchanged**: The benchmark interest rates, including the repo rate, remain unchanged at 6.5%. This decision, upheld since February 2023, reflects RBI’s cautious approach towards monetary policy amid evolving economic conditions.
– **Monetary Policy Committee Decision**: The MPC, comprising both RBI and external members, maintains the repo rate at its current level for the eighth consecutive meeting. The decision is supported by a majority vote, highlighting consensus among committee members.
– **Inflation Outlook**: Despite a marginal decrease, annual retail inflation in April remains above the MPC’s target. RBI projects CPI inflation to be at 4.5% for FY25, indicating a balanced outlook on inflation management.
– **Economic Growth**: Official data reveals a faster-than-expected expansion of 7.8% in the March quarter, underscoring the economy’s resilience and recovery trajectory.
– **Policy Measures**: RBI proposes several policy measures, including the establishment of a digital payments intelligence platform and the rationalization of Foreign Exchange Management Act guidelines. Additionally, the threshold for bulk deposits in banks is raised to Rs 3 crore.
– **Foreign Exchange Reserves**: India’s foreign exchange reserves reach a record high of $651.5 billion as of May 31, indicating improved external resilience and confidence in the economy’s fundamentals.
– **Liquidity Operations**: RBI pledges to maintain flexibility in liquidity operations to ensure stability in the financial system and support economic growth.
Overall, RBI’s latest monetary policy announcement reflects a balanced approach towards supporting economic recovery while maintaining price stability and resilience in the financial system.