The Reserve Bank of India (RBI) Governor Shaktikanta Das revealed the second bi-monthly monetary policy of FY 2024-25 on Friday, marking the first policy announcement post the Lok Sabha election results 2024. The six-member Monetary Policy Committee (MPC) headed by Das decided to maintain the benchmark repo rate at 6.5%, unchanged for the eighth consecutive time, with a majority vote of 4:2.
In addition to keeping the repo rate steady, the MPC decided to continue with its stance of ‘withdrawal of accommodation’, reflecting the central bank’s cautious approach towards monetary policy amid evolving economic conditions.
Despite maintaining the status quo on interest rates, the RBI raised its GDP growth forecast for FY25 to 7.2% from the earlier projection of 7%, signaling optimism about economic recovery and growth prospects. However, the central bank retained its inflation forecast for FY25 at 4.5%, highlighting its commitment to price stability.
Financial experts and analysts are closely monitoring the RBI’s future policy trajectory, with speculation arising about a potential change in stance in August 2024. Deepak Agrawal, CIO – Debt, Kotak Mutual Fund, suggests a higher probability of the RBI shifting its MPC stance to “Neutral” in preparation for rate adjustments in the latter half of FY 2025.
Market reactions to the policy decision have been relatively muted, with 10-year Gsec yields trading within a narrow band of 7-7.03%. Nilesh Shah, Managing Director, Kotak Mahindra AMC, commends the RBI’s prudent conduct, noting the favorable economic indicators and stable market conditions.
As the RBI continues to navigate through the complexities of economic recovery and inflation management, stakeholders remain attentive to forthcoming policy developments and their implications for monetary stability and growth. Follow the RBI MPC Meeting Live for the latest updates and insights from experts in the financial landscape.
