The Reserve Bank of India (RBI) has once again kept the repo rate unchanged at 6.5 percent. On Thursday, RBI Governor Shaktikanta Das announced the decisions of the Monetary Policy Committee (MPC), which kept the repo rate at 6.5 percent.
Governor Shaktikanta Das said the Monetary Policy Committee met on August 6, 7 and 8, in which it was decided by a majority of 4:2 to keep the repo rate unchanged at 6.5%. This decision has been taken due to inflation being over 5 per cent and our target is to bring inflation below 4 per cent. There has been no change in the repo rate since February 2023.
Governor Shaktikanta Das said inflation was 4.8 per cent in April and May, but it came down to 5.1 per cent in June due to higher prices of food products. Unless prices are stabilized, development cannot take place. This is why we have continued our trend of reducing prices.
He further said that inflation in the country is expected to come down in the third quarter. Growth remains at the domestic level.
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The GDP growth estimate for the current financial year has been retained at 7.2 percent. At the same time, the inflation rate has been estimated at 4.5 percent for the financial year 2024-25.
RBI has decided to keep the monetary policy stance of ‘withdrawal of accommodation’. When more money is to be made available in the banking system and more jobs are to be created, the stance of monetary policy is kept accommodative.
The governor further said that inflation is gradually coming down in all economies. However, some challenges remain in the medium term. Manufacturing activities in the country are increasing due to increased demand.
The last time the RBI changed the repo rate was in February 2023. At that time the repo rate was raised to 6.5 percent with the objective of bringing inflation under control.
