December 8, 2023
New Delhi, India
RBI MPC Meeting: Economic Resilience as Repo Rate Holds at 6.5%
In the recent RBI Monetary Policy Committee (MPC) meeting on December 8, RBI Governor Shaktikanta Das announced that the repo rate would remain unchanged at 6.5 percent, maintaining the policy stance of ‘withdrawal of accommodation’ by a majority vote of 5 out of 6 members.
The central bank’s decision aligns with market expectations, as experts anticipated the status quo in light of India’s inflation staying within a comfortable range and the economy exhibiting accelerated growth. This marks the fifth consecutive bi-monthly policy where the RBI has maintained the benchmark policy rate.
Economic Projections and Expectations
Real GDP growth for the fiscal year 2023-24 is projected at 7 percent, demonstrating India’s resilience as the world’s fastest-growing major economy. Despite the fragile global economic environment, India’s GDP expanded at a robust rate of 7.6 percent in the July-September quarter, surpassing expectations. This growth was attributed to increased government spending and advancements in the manufacturing sector. (source: mint)
RBI’s Response to Global Challenges
The last adjustment to the repo rate occurred in February 2023, with a 6.5 percent increase, concluding a series of interest rate hikes initiated in May 2022 due to the repercussions of the Russia-Ukraine war. These disruptions led to elevated inflation within the country, prompting the central bank to take measures to stabilize the economy.
RBI Governor Shaktikanta Das, along with the six-member MPC, emphasized India’s economic resilience amidst the ongoing global challenges. The committee includes both external members and RBI officials, working collectively to determine the policy repo rate to achieve targeted inflation rates while considering growth objectives.
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Key Highlights and Forward Outlook
The central bank, in its post-policy press conference, emphasized the need to remain vigilant, with inflation still above the RBI’s target of 4 percent and the global economic environment remaining fragile. RBI Governor Das reaffirmed the commitment to act promptly when necessary, underscoring the delicate balance between sustaining India’s remarkable growth and addressing inflation concerns.
In conclusion, the RBI MPC‘s decision to maintain the status quo on the repo rate reflects a strategic approach to navigate the complex economic landscape, ensuring stability and fostering continued growth in the Indian economy. Stay tuned for further updates on India’s monetary policy and economic outlook.
