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Informist, Thursday, Aug 8, 2024

 

--RBI Das starts monetary policy announcement 

--RBI Das: 50th meeting of MPC 

--RBI Das: MPC keeps repo rate unchanged at 6.50% 

--RBI Das: MPC voted with 4-2 majority to keep repo rate unchanged 

--RBI Das: MPC retains 'withdrawal of accommodation' stance 

--RBI Das: MSF rate unchanged at 6.75%, SDF rate at 6.25% 

--RBI Das: MPC voted with 4-2 majority to keep stance unchanged 

--RBI Das: Good amount of convergence between mkt expectation, MPC 

--RBI Das ends speech 

--RBI Policy: MPC meeting minutes to be released on Aug 22 

--RBI Policy: MPC member Varma, Goyal voted for 25 bps repo rate cut 

--RBI Policy: MPC Varma, Goyal voted for change in stance to neutral 

 

MUMBAI - The Reserve Bank of India's Monetary Policy Committee today voted with a 4-2 majority to keep the policy repo rate unchanged at 6.50%. The committee also decided to maintain its stance at "withdrawal of accommodation" to ensure inflation progressively aligns with its target, while supporting growth.

 

The rate-setting panel's decision was in line with expectations. In an Informist poll, all the 30 respondents expected the committee to leave the repo rate unchanged at 6.50%. An overwhelming majority of the respondents also expected the committee to continue with the "withdrawal of accommodation" stance.

 

This is the ninth consecutive policy meeting where the six-member committee has left the repo rate unchanged since the tightening cycle began with a 40-basis-point rate increase in May 2022, followed by three increases of 50 bps each, a 35-bps hike in December 2022, and a 25-bps one in February 2023.

 

The RBI kept its GDP growth and CPI inflation forecasts for 2024-25 (Apr-Mar) unchanged at 7.2% and 4.5%, respectively, even as it made changes to the quarterly projections. The Indian economy grew 8.2% in the financial year ended March, while inflation averaged 5.4% in 2023-24.

 

RBI Governor Shaktikanta Das is scheduled to address a press conference at 1200 IST.

 

The RBI lowered its GDP growth projection for Apr-Jun to 7.1% from 7.3?rlier. This, Das said, is primarily due to "updated information on certain high frequency indicators which show lower than anticipated corporate profitability, general government expenditure and core industries output". The central bank projected GDP growth for Apr-Jun of 2025-26 at 7.2%.

 

The central bank raised the CPI inflation forecast for Jul-Sep to 4.4% from 3.8?rlier, and also for Oct-Dec by 10 bps to 4.7%. It lowered the inflation projection for Jan-Mar by 20 bps to 4.3%. It also projected CPI inflation for Apr-Jun in the next year at 4.4%.

 

"Under the current monetary policy setting, inflation and growth are evolving in a balanced manner and overall macroeconomic conditions are stable," Das said in his statement. "Growth remains resilient, inflation has been trending downward and we have made progress in achieving price stability; but we have more distance to cover."

 

Das said that the progress towards the price stability goal has been uneven due to large and persistent supply side shocks, especially in food items. "We, therefore, need to remain vigilant to ensure that inflation moves sustainably towards the target, while supporting growth. This approach would be net positive for sustained high growth," he said.

 

While four of the six panel members voted to keep the repo rate unchanged, external members Jayanth Varma and Ashima Goyal voted to lower the policy repo rate by 25 bps. Varma and Goyal were also the only two committee members to vote for a change in stance to 'neutral'.

 

With the repo rate left unchanged at 6.50%, the standing deposit facility stays at 6.25%, and the marginal standing facility rate and bank rate at 6.75%. The minutes of this MPC meeting will be published on Aug 22.

 

This was the 50th meeting of the MPC since its inception in September 2016. This was also the last meeting of the current set of external members, which includes Shashanka Bhide. The government, in October 2020, had appointed Goyal, Bhide and Varma as the three external members of the MPC for four years.

 

The next meeting of the MPC, which will have a new set of external members, is scheduled for Oct 7-9.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

 

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