The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the Monetary Policy statement on Wednesday.
Reserve Bank of India (RBI) Governor Shaktikanta Das released the Monetary Policy statement, which raised the repo rate by 25 basis points on February 8. The central bank had increased the important benchmark interest rate by 35 basis points in its December monetary policy review (bps). The Reserve Bank has raised the short-term lending rate by 225 basis points since May of last year in an effort to keep inflation under control.
In his policy speech, RBI Governor Shaktikanta Das stated that a rate increase of 25 basis points is necessary at this time in order for the monetary system to remain flexible and aware of inflation.
This year's first Monetary Policy Statement was released at this time. The repo rate increased by 0.35 percentage points to 6.25% in December 2022. The 3.35% reverse repo rate remained unchanged.
Shaktikanta Das added that the MPC has chosen to maintain its "withdrawal of accommodation" posture in order to sustain growth while ensuring that inflation stays within the goal going forward.
GDP Growth:
Experts predicted that the central bank may only choose to raise the benchmark interest rate by 25 basis points because of the projected slowdown in GDP growth in the upcoming fiscal year beginning in April, retail inflation's signs of moderation, and the fact that it is still below the RBI's 6% upper tolerance level. RBI projects GDP growth at 6.4% for 2023-24.
Marginal Standing Facility rate:
The marginal standing facility rate and the bank rate will remain unchanged at 6.75% and 6.25%, respectively. By a vote of 4 out of 6 members, the MPC also resolved to continue concentrating on the withdrawal of accommodation in order to maintain target inflation going forward while promoting growth.
Inflation:
Major economies continue to have high inflation rates. According to Das, the situation is still unstable and volatile. Das remarked that even though retail inflation has recently moderated, it will likely remain above the target rate of 4%. According to the Governor, retail inflation would likely average 5.6 per cent in Q4. Das expressed concern about the fact that core inflation has remained stable.
CPI inflation estimate for FY24 revised to 5.3%. The central bank also reduced its original CPI inflation projection from 6.7 per cent to 6.5 per cent.
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 "Repo rate hiked by 25 basis points to 6.5% for 2023-24, announces RBI Governor")
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