RBI Monetary Policy Report Out: Repo Rates remain Unchanged
This decision by the Monetary Policy Committee (MPC) reflects a careful balance between managing inflationary pressures and supporting economic growth
RBI – Reserve Bank of India – RBI Monetary Policy Report – Repo rates unchanged by RBI – TAXSCAN
RBI – Reserve Bank of India – RBI Monetary Policy Report – Repo rates unchanged by RBI – TAXSCAN
The Reserve Bank of India ( RBI ) has decided to keep the repo rate unchanged at 6.5% in its latest monetary policy meeting held in October 2024.
The RBI decision comes amid ongoing global economic uncertainties, with geopolitical tensions, volatile global financial markets, and climate shocks posing significant risks to the domestic economy.
Ready to Grow? Choose a Course That Fits Your Goals!
The Reserve Bank Governor Shaktikanta Das reassured that RBI is committed to aligning inflation with the targeted 4% level on a durable basis while ensuring that economic growth remains robust. Headline inflation moderated to 4.4% during April-August 2024, down from 5.2% in the second half of 2023-24.
The moderation has been uneven, with food price inflation remaining a key driver of price pressures. Despite these fluctuations, the central bank expects inflation to average 4.5% for the fiscal year 2024-25.
The decision to hold the repo rate steady was taken with a 4-2 majority among MPC members, indicating a divergence in views on how to handle inflation and growth. The RBI's current stance of withdrawing accommodation aims to ensure that inflation progressively aligns with the target while still providing support to the economy. The central bank highlighted that food price pressures could potentially spill over to core inflation, which necessitates a cautious approach.
Ready to Grow? Choose a Course That Fits Your Goals!
The domestic economic outlook remains positive, with real GDP growth projected at 7.2% for 2024-25. Private consumption and investment activities have shown resilience, contributing significantly to economic growth.
The rural economy, supported by a favourable monsoon and increased sowing activities, is expected to further strengthen domestic consumption. High capacity utilisation and buoyant steel consumption indicate strong investment momentum, which bodes well for the overall growth trajectory, as per the Bi-Monthly Monetary Policy Report from RBI.
Additionally, the RBI has introduced measures to enhance digital financial transactions. The per-transaction limit for UPI 123Pay has been increased from ₹5,000 to ₹10,000, while the UPI Lite wallet limit has been raised from ₹2,000 to ₹5,000, with the per-transaction cap set at ₹1,000. These changes are aimed at promoting digital payments and financial inclusion, especially among feature phone users.
Ready to Grow? Choose a Course That Fits Your Goals!
The RBI approach reflects a focus on maintaining macroeconomic stability while encouraging growth and innovation in the financial sector. However, the central bank remains watchful of potential risks, particularly those related to food inflation and global financial market volatility.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
