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

New Delhi, June 07, 2024.

The Reserve Bank of India’s Monetary Policy Committee (MPC), which had kickstarted its meeting on Wednesday, has kept the repo rate unchanged at 6.5 per cent for the eight consecutive time. This is the first time the MPC met after the results of the Lok Sabha election were declared.

The government has mandated the RBI to ensure CPI inflation at 4 per cent with a margin of 2 per cent on either side.

In April, the Central Bank had decided to keep the repo rate unchanged at 6.5 per cent and maintain the policy stance of ‘withdrawal of accommodation’ in the monetary policy. Both the decisions were taken in a majority 5:1 voting by the six-member MPC, headed by Das.

Reacting to the move, Adhil Shetty, the CEO of Bankbazaar.com, said that inflation is on a declining trajectory, and GDP growth is optimistic. “At this stage, the RBI has wisely decided not to lower its guard but to continue working towards ensuring that inflation aligns durably and sustainably with its target.”

He added: “Borrowers may face continued high interest rates on loans. Since the repo rate directly influences lending rates, an unchanged rate means existing loans remain benchmarked to an elevated repo rate at 6.50 with the possibility of new loans being offered with lower spreads than older loans. As the wait for rate cuts continues, borrowing costs are likely to increase. However, interest rates on fixed deposits (FDs) are also expected to rise, with banks offering competitive rates to attract more depositors. This is the best time to monitor rates as banks may offer higher interest rates on FDs to attract more deposits, as they try to balance their own lending and deposit rates.”

“RBI Governor’s focus on ensuring that inflation progressively aligns to its target of 4% on a durable basis – leads to the Reserve Bank keeping the policy rates unchanged as well as maintaining its stance on withdrawal of accommodation! The Governor however alluded to the fact that the Inflation-Growth balance is moving favourably, although food inflation continues to remain elevated. I guess a normal monsoon and lower global commodity price uncertainty may turn out to be the key lever for RBI making a shift in their stance towards a rate cut. There is definitely, for now, a reason to maintain, “Poise, Patience & Perseverance” as the Governor concluded! Said ‘’Mr. Manish Kothari, President & Head – Commercial Banking, Kotak Mahindra Bank Limited’’