Reserve Bank of India (RBI) Governor Shaktikanta Das. File
| Photo Credit: Reuters
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday (August 8) announced the bi-monthly monetary policy statement, keeping the repo rate, which is the central bank’s rate for short-term loans to banks, unchanged at 6.5%.
The Governor also said inflation and growth are evolving in a balanced manner, though we need to remain vigilant on the food prices front.
In the Monetary Policy Committee (MPC) meeting, majority members voted to hold the rates. Four voted in favour and two against. Following the policy announcement, Mr. Das will hold a press conference at 12 p.m. on Thursday, which will be streamed live on the RBI’s X handle.
The RBI Governor, speaking at the Bombay Chamber of Commerce and Industry, projected the real GDP growth for the current financial year at 7.2%. RBI has adjusted its CPI inflation forecast for FY25 to 4.4%. A degree of relief in retail inflation is expected from pickup in southwest monsoon, Mr. Das said.
“Agriculture will push consumption”
Projecting the retail inflation at 4.5% for FY’25, Mr. Das said improved agricultural activities will brighten the prospects of rural consumption, given the conditions of a normal monsoon. “Continued high food prices slowed the process of disinflation in Q1FY’25,” he said.
He said high food inflation would also impact household inflation expectations. “Overall inflation trajectory moderating, expect continued moderation, but we need to be watchful. The RBI will continue to be nimble and flexible in liquidity management operations.” Asking the MPC to be vigilant as the country is witnessing persistently high food inflation, he said the Indian financial system remains resilient, gaining strength from broader macroeconomic stability.
Rupee remains largely range-bound in August
The Indian Rupee remained largely range-bound in August. The Governor, calling the banks to be careful, said a decline in deposits may expose banks to structural liquidity issues. He further expressed concern over rising disbursals of top-up home loans, asking lenders to take remedial actions.
“The Current Account Deficit is to remain imminently manageable during this fiscal. India’s forex reserves touched a record high of $675 billion as of August 2,” the Governor said. The RBI also proposed a public repository of digital lending apps to check unauthorised players. The RBI also raised the tax payment limit through UPI from ₹1 lakh to ₹5 lakh. The central bank raised the frequency of reporting of banks to Credit Information Companies to a fortnight, as against once a month currently. The RBI has proposed steps to speed up the clearance of cheques to a few hours.
Also read | Policy repo rate unchanged at 6.5%; real GDP growth for FY25 projected at 7%
Offering a comment Anuj Puri, Chairman, of Anarock Group said, “The RBI’s decision to keep repo rates unchanged at 6.5% for the ninth consecutive time aligns well with yesterday’s announcement on indexation benefits. It sets a positive tone for the housing industry. Maintaining interest rates offers consistency in borrowing costs, which will prompt more aspiring homebuyers to consider taking the plunge – and thus drive demand in the housing market. With interest rates staying steady, EMIs will remain manageable for current and potential homeowners, potentially leading to increased home sales – particularly in the price-sensitive affordable segment.”
(With inputs from PTI)
