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RBI Monetary Policy committee: key highlights

RBI Monetary Policy committee key highlights: The Reserve Bank of India (RBI) kept the policy repo rate unchanged at 6.50% for the third consecutive time on August 10, 2023 meaning there will be no change in the interest rates on home and auto loans.

The repo rate, the key policy rate at which the central bank lends to the banks, was last hiked in February 2023 by 25 basis points (bps). The RBI had kept the rate unchanged in April and June meetings.

The six-member monetary policy committee (MPC) didn’t tinker with the repo rate even though headline CPI (consumer price index) inflation rose to a three-month high of 4.81 per cent in June. However, retail inflation still remains below the apex bank’s upper limit of 6 per cent.

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Key Highlights of MPC announcements:

  • GDP growth forecast for January-March 2024 retained at 5.7 percent.
  • GDP growth forecast for April-June 2024 pegged at 6.6 percent.
  • The momentum of overall economic activity in India is positive and industrial activity is holding ground, as industrial production growth (IIP), core data and PMI shows, says RBI Governor Das.
  • The global economy continues to face daunting challenges of elevated inflation, high levels of debt, tight and volatile financial conditions, continuing geopolitical tensions, fragmentations and extreme weather conditions, says Das.
  • These external factors are likely to impinge on the growth prospects of most major advanced and emerging economies. India is, however, expected to withstand these external headwinds far better than many other countries.
  • Investment activity gained further steam on the back of government capital expenditure, rising business optimism and revival in private capex in certain key sectors.
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Other announcements

Policy stance

RBI Governor said that the MPC decided to keep the policy stance unchanged at ‘withdrawal of accommodation’ with 5 of 6 MPC members supporting for this stance.


The MPC will remain watchful of inflation and remains resolute to its commitment to align inflation to the targeted level, says Das.

RBI Governor Shaktikanta Das said that the MPC decided to raise FY24 inflation projection to 5.4 percent from 5.1 percent amid increasing food prices.

  • CPI inflation forecast for July-September 2023 raised to 6.2 percent from 5.2 percent.
  • CPI inflation forecast for October-December 2023 raised to 5.7 percent from 5.4 percent.
  • CPI inflation forecast for January-March 2024 retained at 5.2 percent.
  • CPI inflation forecast for April-June 2024 pegged at 5.2 percent.
  • Inflation excluding food and fuel (core inflation) has softened by more than 100 bps from its recent peak in January 2023. The month of July has witnessed accentuation of food inflation, primarily on account of vegetables.
  • Das attributed higher inflation to a spike in tomato prices and a rise in cereal pulses
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India’s current account deficit (CAD) was contained at 2 percent of GDP in 2022-23 as compared with 1.2 percent in 2021-22. Merchandise trade deficit has narrowed in Q1 of 2023-24 with contraction in imports exceeding contraction in exports.

Services exports and remittances are, however, expected to provide cushion to the current account deficit. The RBI, therefore, expect CAD to remain eminently manageable during the current financial year also.

The Indian rupee has remained stable since January 2023 and forex reserves crosses $600 billion, says Guv Das.

Read Also: High growth in Indian services sector

More transparent home loan rates reset, EMIs

The RBI has asked lenders to enhance transparency while adjusting the interest rates and EMIs for floating-rate home loans using the external benchmark-based lending rate mechanism.

The central bank has emphasised the necessity for banks to adopt a clear framework for determining the pricing of their floating-rate interest.

The central bank proposes framework for allowing borrowers to switch to fixed interest rate regime.

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