RBI Governor announces monetary policy, repo rate unchanged at 6.5 pc

RBI Governor Shaktikanta Das announced the second bimonthly monetary policy for the financial year 202425 at 10 am on FridayThis marks the RBIs first policy announcement since the results of the Lok Sabha elections 2024The RBI has decided to keep the policy rate unchanged for the eighth time in a row saying it will maintain a tight vigil on inflationThe rate increase cycle was paused in April last year after six consecutive rate hikes aggregating to 250 basis points since May 2022The Monetary Policy Committee MPC chaired by Governor Das has been convening in Mumbai this week to deliberate on key policy decisions amidst a challenging economic landscapeAnnouncing the second bimonthly monetary policy for the current financial year RBI Governor Shaktikanta Das said the Monetary Policy Committee MPC has decided to keep the repo rate unchanged at 65 per centRBI Governor Das said The MPC met on the 5th 6th and 7th June 2024 After a detailed assessment of the evolving macroeconomic and financial developments and the outlook it decided by a 4 to 2 majority to keep the policy repo rate unchanged at 650 per centHe said MPC will remain watchful of elevated food inflation amid the expectation of a normal monsoonThe RBI raised the growth projection to 72 per cent from an earlier estimate of 7 per cent for the current financial yearThe government has mandated the RBI to ensure CPI inflation at 4 per cent with a margin of 2 per cent on either sideAccording to the reports from ANI the central banks stance on the benchmark interest rate has garnered significant attention particularly given the persistent inflationary pressures especially in the food sectorThe RBIs repo rate since its last increase in February 2023 is currently held at 650 per cent It is widely anticipated to remain unchanged for the eighth consecutive bimonthly policy reviewM Govinda Rao former director of the National Institute of Public Finance and Policy and member of the Fourteenth Finance Commission told ANI It is widely expected that the MPC will hold the policy rate in the eighth consecutive meetingThe inflation rate particularly the food inflation continues to be much higher than the target rate of 4 per cent he addedFood inflation has been a persistent concern with rural areas experiencing a 059 per cent rise and urban areas seeing a 103 per cent increase in April leading to a combined national food inflation increase of 074 per centThis trend underscores the challenges faced by the central bank in maintaining price stabilityThe agricultural industry is optimistic in spite of these inflationary pressures In the upcoming months the forecast of an aboveaverage monsoon and expected improvements in agricultural production may serve to reduce food inflationLooking ahead the forecast of above normal southwest monsoon by the India Meteorological Department IMD is expected to boost kharif production and replenish the reservoir levels Das said according to a statement released by RBI on FridayAddressing global growth and inflation in the statement RBI governor Das said Global growth is sustaining its momentum in 2024 and is likely to remain resilient supported by a rebound in global tradeInflation is easing but the final leg of this disinflation journey may be tough he addedWith inputs from ANI and PTI