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Repo rate unchanged, RBI chief projects GDP growth at 7.2 percent

RBI Governor Shaktikanta Das has said that the GDP growth that is now being projected for the current financial year 2024-25 is 7.2% with Q1 at 7.3%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%. The risks are evenly balanced, he assured.
The RBI Governor Shaktikanta Das further said that the Monetary Policy Committee decided by a 4:2 majority to keep the policy repo rate unchanged at 6.5%.

Consequently, he added, the standing deposit facility (SDF) rate remains at 6.25%, and the marginal standing facility (MSF) rate and the bank rate at 6.75%.

“…The provisional estimates released by the National Statistical Office (NSO) placed India’s real gross domestic product, that is GDP growth at 8.2% for the year 2023-24. During 2024-25, so far the domestic economic activity has maintained resilience. Manufacturing activity continues to gain ground on the back of strengthening domestic demand. The 8 core industries posted healthy growth in April 2024. Purchasing Managers Index, that is PMI in manufacturing continued to exhibit strength in May 2024 and it is indeed the highest globally. The services sector maintained buoyancy as evident from available high-frequency indicators. PMI services stood strong at 60.2 in May 2024, indicating continued and robust expansion in activity…”, he said.

The RBI chief further added, “…The inflation growth balance is moving favourably. Growth is holding firm. Inflation continues to moderate, mainly driven by the core component, which reached its lowest level in the current series In April 2024. The deflation in fuel prices is ongoing. Food inflation, however, remains elevated. While the MPC took note of the disinflation achieved so far without hurting growth, it remains vigilant to any upside risks to inflation, particularly from food inflation, which could possibly derail the path of disinflation. Hence, monetary policy must continue to remain disinflationary and be resolute in its commitment to aligning inflation to the target of 4% on a durable basis. Sustained price stability would set strong foundations for a period of high growth. Accordingly, the MPC decided to keep the policy repo rate unchanged at 6.5% in this meeting of the MPC. The MPC also decided to remain focused on withdrawal of accommodation to ensure anchoring of inflation expectations and fuller policy transmission…”