RBI keeps repo rate unchanged at 6.5 per cent
New Delhi: The Reserve Bank of India on Thursday announced an unchanged repo rate (basic interest rate) on the expectations of lower inflation in the coming months due to past six successive rate hikes since May 2022. The RBI expects the real GDP for ’23-24 to be 6.5 per cent. The current April to June period will deliver the fastest growth of 7.8 per cent followed by 6.2 per cent, 6.1 per cent and 5.9 per cent in the next three quarters of ’23-24.
This projection is slightly higher than the World Bank’s latest expectations of 6.3 per cent GDP growth and the Asian Development Bank’s (ADB) forecast of 6.4 per cent. Terming the international situation as dynamic and fast evolving, RBI chief Shaktikanta Das warned that volatility in external markets will be a major risk factor for the health of the economy as well as stability of the rupee.
“We are living in very volatile times. The sudden announcement of output cut by OPEC and the jump in crude prices is another evidence of this volatility,’’ he said while announcing the decision of the Monetary Policy Committee (MPC) which met for three days from April 3, the first time in this fiscal.
The RBI chief said any further interest rate hike has been held back on the expectations of a modest inflation rate due to low prices in the Indian crude basket and a decent monsoon. Despite the elevated inflation seen in January and February due to sharp turnaround in food inflation, Das said the RBI expects the inflation rate to moderate to 5.2 per cent. The rate will be evenly spread over all the quarters with 5.1 per cent projection in April to June quarter. It will be 5.4 per cent, 5.4 per cent and 5.2 per cent in the next three quarters.
“With unyielding core inflation, we remain vigilant in our pursuit of price stability which is the best guarantee of sustained growth,’’ said Das. “Though the record rabi harvest bodes well for easing of food prices and there is already evidence of correction in March, unseasonal rains need to be watched,’’ said the RBI chief. Besides adverse climatic conditions, the other risk to future inflation is imported inflation which will need to be monitored, he said.