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Express News Service
MUMBAI: As widely expected, the Reserve Bank of India (RBI) on Thursday decided to leave the repo rate unchanged at 6.5 per cent.
Announcing the decision of the Monetary Policy Committee (MPC), governor Shaktikanta Das said that inflation has shown a downward trend but it is still above the central bank’s target of 4 percent.
“Given the uncertainties, we need to maintain Arjuna’s eye on the evolving inflation scenario. Let me re-emphasise that headline inflation still remains above the target and being within the tolerance band is not enough. Our goal is to achieve the target of 4.0 per cent, going forward,” said Das.
“Headline inflation is projected to decline in 2023-24 from its level in 2022-23 but would still be above the target, warranting continuous vigil,” said Das.
The central bank decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target.
“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” he added.
The cumulative rate hike of 250 basis points undertaken by the MPC is transmitting through the economy and its fuller impact should keep inflationary pressures contained in the coming months. Monetary policy would need to be carefully calibrated for alignment of inflation with the target, said the governor.
All members of the MPC – Dr Shashanka Bhide, Dr Ashima Goyal, Prof. Jayanth R. Varma, Dr Rajiv Ranjan, Dr Michael Debabrata Patra and Shaktikanta Das – unanimously voted to keep the policy repo rate unchanged at 6.50 per cent.
Assuming a normal monsoon, the reserve bank expects CPI inflation at 5.1 per cent for 2023-24, with Q1 at 4.6 per cent, Q2 at 5.2 per cent, Q3 at 5.4 per cent and Q4 at 5.2 per cent and expects real GDP growth for 2023-24 at 6.5 per cent.
Talking about liquidity management, the governor said that since the third week of May, the decline in currency in circulation and pick-up in government spending have expanded the system’s liquidity. This has got further augmented due to the Reserve Bank’s market operations and the deposit of Rs 2,000 banknotes in banks.
“Going forward, the Reserve Bank will remain nimble in its liquidity management, while ensuring that adequate resources are available for the productive requirements of the economy. The Reserve Bank will also ensure the orderly completion of the government’s market borrowing programme,” said the governor.
MUMBAI: As widely expected, the Reserve Bank of India (RBI) on Thursday decided to leave the repo rate unchanged at 6.5 per cent.
Announcing the decision of the Monetary Policy Committee (MPC), governor Shaktikanta Das said that inflation has shown a downward trend but it is still above the central bank’s target of 4 percent.
“Given the uncertainties, we need to maintain Arjuna’s eye on the evolving inflation scenario. Let me re-emphasise that headline inflation still remains above the target and being within the tolerance band is not enough. Our goal is to achieve the target of 4.0 per cent, going forward,” said Das.googletag.cmd.push(function() {googletag.display(‘div-gpt-ad-8052921-2’); });
“Headline inflation is projected to decline in 2023-24 from its level in 2022-23 but would still be above the target, warranting continuous vigil,” said Das.
The central bank decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target.
“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” he added.
The cumulative rate hike of 250 basis points undertaken by the MPC is transmitting through the economy and its fuller impact should keep inflationary pressures contained in the coming months. Monetary policy would need to be carefully calibrated for alignment of inflation with the target, said the governor.
All members of the MPC – Dr Shashanka Bhide, Dr Ashima Goyal, Prof. Jayanth R. Varma, Dr Rajiv Ranjan, Dr Michael Debabrata Patra and Shaktikanta Das – unanimously voted to keep the policy repo rate unchanged at 6.50 per cent.
Assuming a normal monsoon, the reserve bank expects CPI inflation at 5.1 per cent for 2023-24, with Q1 at 4.6 per cent, Q2 at 5.2 per cent, Q3 at 5.4 per cent and Q4 at 5.2 per cent and expects real GDP growth for 2023-24 at 6.5 per cent.
Talking about liquidity management, the governor said that since the third week of May, the decline in currency in circulation and pick-up in government spending have expanded the system’s liquidity. This has got further augmented due to the Reserve Bank’s market operations and the deposit of Rs 2,000 banknotes in banks.
“Going forward, the Reserve Bank will remain nimble in its liquidity management, while ensuring that adequate resources are available for the productive requirements of the economy. The Reserve Bank will also ensure the orderly completion of the government’s market borrowing programme,” said the governor.
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