RBI Keeps Repo Rate Unchanged at 6.5%, Forecasts 6.5% GDP Growth for FY2023-24


Date: June 08, 2023

Place: New Delhi, India

In a much-anticipated move, the Reserve Bank of India (RBI) announced today that it would maintain the key policy repo rate at 6.5 percent. This decision came after a three-day Monetary Policy Committee (MPC) meeting led by RBI Governor Shaktikanta Das.

Addressing the media, Governor Das stated, “The MPC voted unanimously to leave the repo rate unchanged at 6.5 percent.” This decision indicates the central bank’s intent to keep the rate at which it lends money to commercial banks and financial institutions in India steady, aiming to support economic stability.

While the repo rate remained unchanged, the RBI also made a significant announcement regarding its stance. It declared the withdrawal of its accommodative stance, reflecting a shift in its approach toward monetary policy. This change highlights the central bank’s caution and readiness to address potential risks and challenges that may arise.

During the press conference, Governor Das expressed concerns about inflation and acknowledged the lingering uncertainties surrounding monsoons and international commodity prices. He noted that these factors, along with financial market volatility, pose upward risks to inflation.

In terms of economic growth, the RBI maintained its real GDP growth projection for FY2023-24 at 6.5 percent. This forecast considers several factors, including the positive impact of higher Rabi crop output, moderating commodity prices, the trajectory of the monsoon season, and the government’s plans for increased capital expenditure.

The GDP growth projections for the first and second half of the fiscal year were also discussed. While the first half saw a slight upward revision, the second half experienced a minor downward adjustment.

QuarterFiscal Year 2023-24

Please note that the table represents the RBI’s projections for each quarter of the fiscal year 2023-24.

Governor Das emphasized the RBI’s commitment to achieving its inflation target of 4 percent. He stated, “We need to move towards our inflation target, and the RBI will remain watchful and proactive in dealing with emerging risks.”

In addition, the RBI provided inflation forecasts for different periods.

QuarterCPI Inflation Forecast
April-June 20234.6%
July-September 20235.2%
October-December 20235.4%
January-March 20245.2%

Please note that the table represents the CPI inflation forecasts for each specified quarter. The numbers indicate the percentage forecast for CPI inflation in each respective quarter.

Following the RBI’s monetary policy announcement, the Indian stock market responded positively. Both the Sensex and Nifty indices showed gains, with the Sensex trading at 63,280.56, up 137.60 points or 0.22 percent, and the Nifty trading 44.20 points or 0.24 percent higher at 18,770.60 (as of 10:54 IST).

To summarize, Governor Das highlighted the potential deceleration of global economic activity in 2023 due to factors such as elevated inflation, tight financial conditions, and ongoing geopolitical tensions. While the pace of monetary tightening has slowed in recent months, uncertainties remain regarding its future trajectory as inflation continues to surpass targets worldwide.

QuarterGDP Growth Projection
Q1 FY20248.0%
Q2 FY20246.5%
Q3 FY20246.0%
Q4 FY20245.7%
Full Fiscal Year FY20246.5%

Please note that the table represents the RBI’s GDP growth projections for each specified quarter and the overall fiscal year. The numbers indicate the percentage projected GDP growth for each respective period.

It is worth noting that in April, the RBI’s MPC unanimously decided to maintain the repo rate at 6.50 percent, after implementing consecutive rate hikes since May 2022 to curb inflation. The central bank also maintained its stance of “withdrawal of accommodation” during its bimonthly meeting in April.

As of now, the standing deposit facility (SDF) rates remain unchanged at 6.25 percent, while the marginal standing facility (MSF) rate and the bank rates stand at 6.75 percent, as confirmed by Governor Das.

Disclaimer: This news article provides updates on the RBI’s monetary policy decisions and projections. Readers are advised to refer to official sources for further information and consult financial experts before making any investment decisions. CurrencyVeda or its editors are not liable for any loss incurred based on the information provided.