NEW DELHI: The repo rate hike cycle finally paused today. RBU Governor Shaktikanta Das decided to maintain the key benchmark interest rate unchanged at 6.5 percent at the first monetary policy meet of the financial year 2023-24 (FY24). The move stemmed from the turmoil caused by the global banking crisis and the contagion risks.
The central bank has last year since May raised the rates by 250 basis points.
RBI Governor, while announcing the policy, said the MPC members unanimously decided to maintain the status quo on the repo rate while the decision to retain the stance – withdrawal of accommodation, was supported by 5 of 6 members. The governor said that the said stance is meant to ensure inflation aligns with the target while focusing on growth.
The reverse repo rate stands at 3.35 per cent. Further, the GDP growth projection for the current fiscal year has been pegged at 6.5 per cent while the FY24 inflation projection is 5.2 per cent. Real GDP growth for Q1FY24 is estimated at 7.8 per cent, Q2FY24 at 6.2 per cent, Q3FY24 at 6.1per cent, and Q4FY24 at 5.9 per cent.
Meanwhile, Retail inflation was up 6.44 per cent year on year in February declining from 6.52 percent in January. Unseasonal rains and OPEC’s decision to cut output have further added to the food and oil prices.