The Reserve Bank of India (RBI) Governor, Shaktikanta Das, announced the Monetary Policy Committee’s (MPC) decision on interest rates following a two-day review meeting of the central bank’s rate-setting panel. The meeting, held from April 3 to April 5, marked the first MPC announcement of the Financial Year 2024-25 (FY25), wherein the repo rate remained unchanged at 6.5 percent for the seventh consecutive time. The repo rate signifies the rate at which the central bank lends money to banks for the short term.

Regarding the MPC’s decision, Governor Das highlighted that the committee would closely monitor food inflation. The six-member panel favored maintaining the status quo on interest rates by a majority vote of 5:1, emphasizing the continued focus on withdrawing the accommodative stance.

In terms of GDP growth, Governor Das affirmed that there would be no alterations to the forecast for FY25, maintaining the estimate at 7 percent for the current fiscal year.

On the inflation front, the RBI MPC projected a 4.5 percent inflation rate for FY25. Governor Das emphasized the declining trajectory of inflation and the robust GDP growth. He stressed the importance of remaining vigilant to ensure sustained alignment of inflation with the target.

Governor Das also highlighted the expected support for growth from rural demand, anticipating consumption to bolster growth in FY25. The RBI projected retail inflation at 4.5 percent for fiscal 2024-25, with estimates of 4.9 percent in Q1, 3.8 percent in Q2, 4.6 percent in Q3, and 4.5 percent in Q4 of FY25.

Reflecting on the February MPC meeting, it’s worth noting that the RBI maintained the status quo on policy rates and stances. However, the decision wasn’t unanimous, as one member recommended a rate cut of 25 basis points.