RBI Governor, Shaktikanta Das
The Reserve Bank of India’s Monetary Policy Committee (MPC) has opted to maintain the policy repo rate at 6.5 per cent, citing persistently high retail inflation exceeding its 4 per cent target. This marks the seventh consecutive meeting in which the MPC has chosen to retain the status quo on the repo rate. The repo rate serves as the interest rate at which banks access funds from the RBI to address short-term liquidity imbalances.
This is the first monetary policy statement of the current financial year 2024-25, said RBI Governor Shaktikanta Das. “It was decided by a majority of 5:1 to keep the interest rate unchanged at 6.50 per cent. Consquently the Standing Deposit Facility, the SDF rate remains at 6.25 per cent. Marginal Standing Facility (MSF) rate and the bank remain at 6.75 per cent,” said Das.
In its previous review conducted in February 2024, the MPC upheld the existing policy rates and stance. The RBI has also sustained its stance of ‘withdrawal of accommodation’. However, the recent announcement by the India Meteorological Department (IMD) forecasting above-normal temperatures from April to June raises concerns about potential price increases for vegetables, fruits, and other perishable goods.
“The tight demand-supply situation in certain categories of pulses and the production outcome of key vegetables want close monitoring especially in the background of the forecast of above normal temperature in the coming months” said RBI Governor Shaktikanta Das.
Governor Das remarked that the future appears promising for agriculture and rural activities. He emphasized that the strengthening of rural demand and improvements in employment conditions are anticipated to stimulate private consumption.
The Monetary Policy Committee (MPC) was established under the Reserve Bank of India Act, 1934, comprising six members: three from the RBI, including Governor Shaktikanta Das, and three appointed by the Central government. The three-day review meeting of the MPC, which commenced on April 2, concluded today. Governor Das noted that growth has continued to exceed all projections, while headline inflation has moderated to 5.1 per cent in both January and February.
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