The Reserve Bank of India’s Monetary Policy Committee (MPC) decided unanimously on Thursday to keep the policy repo rate unchanged at 6.50% for the second straight meeting, with Governor Shaktikanta Das stressing that the RBI “will remain watchful and proactive in dealing with emerging risks to price and financial stability”.
Laying out the rationale for the MPC’s decision, Mr. Das stressed that “the best contribution monetary policy could make in helping the economy realise its potential would be by ensuring price stability”.
“Headline inflation, however, is still above the target as per the latest data and is expected to remain so according to our projections for 2023-24,” he noted. “Therefore, close and continued vigil on the evolving inflation outlook is absolutely necessary, especially as the monsoon outlook and the impact of El Nino remain uncertain.”
The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth. “The rate action this time is obviously a pause. Future action will depend on the evolving situation,” Mr. Das added.
The RBI forecast real GDP growth for 2023-24 at 6.5%, and projected CPI inflation for the current fiscal year to average 5.1%.
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