RBI monetary policy: Repo rates unchanged at 6.5%
However, RBI revised the GDP growth projection for the current fiscal sharply downward to 6.6% from the earlier estimate of 7.2%.
However, RBI revised the GDP growth projection for the current fiscal sharply downward to 6.6% from the earlier estimate of 7.2%.
However, RBI revised the GDP growth projection for the current fiscal sharply downward to 6.6% from the earlier estimate of 7.2%.
Mumbai: The Reserve Bank of India (RBI) maintained its policy rate on Friday for the 11th consecutive time but revised the GDP growth projection for the current fiscal year sharply downward to 6.6% from the earlier estimate of 7.2%, reported PTI.
The decision to hold interest rates steady came despite GDP growth in the July-September quarter dropping to a seven-quarter low of 5.4%, falling short of the RBI's earlier forecast of 7%.
The central bank paused its rate hike cycle in April last year after raising rates six times since May 2022, with a cumulative increase of 250 basis points. Presenting the fifth bi-monthly monetary policy review for the current financial year, RBI Governor Shaktikanta Das announced that the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.5% while retaining a neutral policy stance.
"The MPC will remain watchful of incoming macroeconomic data for future action," Das said. The RBI also revised its inflation target upward, projecting it at 4.8% compared to the earlier estimate of 4.5%. In a move aimed at boosting banks' lending capacity and supporting economic activity, the RBI reduced the Cash Reserve Ratio (CRR) from 4.5% to 4%. This measure is expected to release Rs 1.16 lakh crore into the banking system, enhancing liquidity and lending capabilities.
The CRR is the proportion of a bank’s deposits that must be held in liquid cash with the RBI. Banks receive no interest on this reserve, and the percentage is periodically determined by the central bank.
The government had reconstituted the RBI's Monetary Policy Committee (MPC) in October, bringing in three new external members — Ram Singh, Saugata Bhattacharya, and Nagesh Kumar. This was the second meeting of the revamped panel.