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7-6-2024

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Last update: 1 days ago

RBI Monetary Policy 2024 Highlights: RBI MPC keeps repo rate unchanged at 6.5%; 7.2% GDP growth seen in FY25, says Shaktikanta Das

RBI Monetary Policy June 2024 Highlights: RBI governor Shaktikanta Das-led Monetary Policy Committee kept the repo rate unchanged on expected lines. RBI’s MPC meeting was scheduled from June 5-June 7th. Repo rate, the rate at which the Reserve Bank of India lends to commercial banks, currently stands at 6.5%. RBI initiated the rate hike cycle in 2022 and since then the repo rate has been raised by 250 basis points.

RBI’s Monetary Policy Committee, led by the RBI governor, has six members. The key goal is to keep the Consumer Price Inflation (CPI) closer to the 4% target with a +/- 2% range. The inflation pressures have to be tamed without compromising on the growth. CPI inflation has been within the central bank’s comfort zone for some months now, but with the monsoon season round the corner, the MPC may strike a cautious note. Additionally, India’s GDP growth rate for the fiscal year 2023-24 recently came in at a better than expected level of 8.2%, reducing the chances of a repo rate cut further.

RBI is also likely to keenly watch the policies of the incoming Modi-led NDA new government, especially with regard to fiscal measures, to study the impact on inflation.

Loan borrowers look at the RBI monetary policy for relief in loan EMIs. A high repo rate by the RBI makes it costlier for banks to borrow, which in turn results in higher interest rates for loan borrowers. Any rate cut results in lower rates, hence lowering the EMIs loan borrowers have to pay.

Last update: 2 days ago