RBI keeps repo rate unchanged at 6.5% for eighth time in row, FY25 GDP projection raised to 7.2%

New Delhi, June 07, 2024.

The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the second bi-monthly monetary policy of the financial year 2024-25 on Friday. This is the first RBI policy after the Lok Sabha election results 2024. The RBI Governor headed six-member Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 6.5% for the eight consecutive time by a 4:2 majority. It also decided to continue with its stance of ‘withdrawal of accommodation’. RBI raised its GDP growth forecast for FY25 to 7.2% from 7% earlier. 

The RBI’s focus on building a secure financial system is commendable. Last week, RBI published its Annual Report which highlighted a rise in digital payment frauds. This surge emphasizes the urgency of tackling financial scams. Proactively, the RBI is working towards fortifying digital trust within the financial ecosystem, said Ankit Ratan, Co-founder & CEO, Signzy.

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank Said” RBI’s status quo on rates and stance was in line with market expectations, but the split in voting patterns clearly shows the increasing probability towards a pivot in the policies ahead. However, we believe the robust growth will give enough opportunity for the MPC to remain on a wait and watch mode until better clarity comes from monsoons and quality of expenditure from the Budget. We see room for stance change in the August policy with a plausible easing from October meeting.”

The RBI decision to continue remaining focused on the withdrawal of accommodation reflects a balanced approach to sustain economic growth while keeping inflation in check. RBI’s decision on e-mandates for recurring payments to be extended to fastags, introduction of auto replenishment of UPI-like wallet, and establishment of a digital payments intelligence platform, is all set to promote a resilient banking sector, said Ajay Kumar Srivastava, Managing Director & CEO, Indian Overseas Bank.