RBI monetary policy 2024: The Reserve Bank of India (RBI) kept the real GDP growth estimate for the current fiscal year at 7% during its first bi-monthly committee meeting for FY24–25.
The GDP growth target for Q2 FY25 was revised to 6.9%, up from the previous estimate of 6.8%, and for Q1 FY25 it was changed to 7.1% from the previous 7.2%. The growth rate for Q3 FY24 is still expected to be 7%, same as previously predicted. The RBI changed the growth rate from 6.9% to 7% in the last quarter of the fiscal year.
India’s GDP growth rate in the quarter ended December 2023 was 8.4%, a considerable increase over the RBI’s forecast. This confirms that India’s major economy is growing at the fastest rate in the world. India’s growth is expected to increase from 7.3% in FY23 to 7.6% in FY24, based on the NSO’s second advanced estimate.
Governor Shaktikanta Das states, “Due to its faster GDP growth and fiscal consolidation, India presents a different picture. Speaking of home growth, the economy in the country is still growing at a rapid rate thanks to fixed investment and a bettering global environment.”
RBI monetary policy 2024- Repo rate remained constant
After three days of discussion, the Reserve Bank of India (RBI) decided to keep its benchmark interest rate, or repo rate, at 6.5% in terms of policy rates. The RBI has decided to keep interest rates unchanged for the seventh time in a row.
Moreover, the RBI Governor Shaktikanta Das and the MPC maintained the 6.25% and 6.75% rates for the standing deposit facility and marginal standing facility, respectively.
RBI Governor Shaktikanta Das stated that the Monetary Policy Committee, with five out of six members in agreement, has opted to prioritize the gradual withdrawal of accommodation to steer inflation towards the target while still bolstering growth.
In order to be in line with the goal of achieving a 4% target for consumer price-based inflation (CPI), the MPC decided to keep things as they are.
According to earlier research from SBI, the RBI may only think about lowering rates in the third quarter of the fiscal year 2025 (Q3FY25). This is because historical data indicates that emerging economies’ interest rates typically adjust two months after developed economies like the US and the UK do.
SBI Research noted that India, however, varies from this pattern because the central bank’s actions regarding interest rates are not heavily impacted by changes in rates in developed nations.
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