Reserve Bank of India retains repo rate, GDP projection at 6.5 pc

The Reserve Bank of India on Friday decided to keep the policy rate unchanged for fourth time in a row as it maintains a tight vigil on inflation The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022Announcing the bimonthly monetary policy on Friday RBI Governor Shaktikanta Das said the Monetary Policy Committee MPC unanimously decided to keep the repo rate unchanged at 65 per centHe said the MPC will remain watchful of the inflation and remains resolute in its commitment to align inflation to the targeted level According to him the growth projection has been retained at 65 per cent for the current financial year with risks evenly balancedThe MPC meeting took place against the backdrop of Consumer Pricebased Inflation CPI touching 683 per cent in August The September print of inflation is expected next week The government has mandated the RBI to keep CPI inflation at 4 per cent with a margin of 2 per cent on either sideAlso read Mumbai 7 dead 51 injured as massive fire breaks out in GoregaonMeanwhile The Reserve Bank said India is poised to become the growth engine of the world as it retained the GDP projection for the current fiscal at 65 per centUnveiling the bimonthly monetary policy review Reserve Bank of India RBI Governor Shaktikanta Das said the domestic economy exhibits resilience on the back of strong demandHe said the economic growth in the current year is expected to be at 65 per cent with risks evenly balanced The projection is the same as was estimated in the August monetary policyThe RBI continued to maintain status quo in the key policy rate and retained the repo rate at 65 per cent for the fourth time in a rowThe Reserve Bank retained the inflation forecast for 202324 at 54 per cent and vowed to take timely measures to prevent any spillovers of global food and fuel price shocksStressing that the Reserve Bank has identified high inflation as a major risk to macroeconomic stability and sustainable growth Governor Shaktikanta Das said the September retail inflation number may be lower than August and July printsThe headline inflation based on Consumer Price Index CPI moderated to 46 per cent in first quarter of 202324 as compared to 73 per cent in the same period a year agoA significant easing of inflation pressures from its exceptionally high level in July and August is expected to materialise in September as the impact of fleeting food price shocks wane Das saidRBI has projected the CPI inflation at 54 per cent for 202324 with Q2 at 64 per cent Q3 at 56 per cent and Q4 at 52 per cent The risks are evenly balanced CPI inflation for the first quarter of 202425 is projected at 52 per centIn August monetary policy too the inflation for the current fiscal was projected at 54 per centDas said while growth remains on track the declining trend in inflation was interrupted in JulyAugust 2023 due to price shocks in certain food itemsVolatile energy and food prices in the wake of lingering geopolitical tensions and adverse weather conditions render uncertainty to the inflation outlookWe remain vigilant of the evolving inflation dynamics I would like to emphatically reiterate that our inflation target is 4 per cent and not 2 to 6 per centOur aim is to align inflation to the target on a durable basis while supporting growth the governor saidHe further said while nearterm inflation is expected to soften on the back of vegetable price correction especially in tomatoes and the reduction in LPG prices the future trajectory will be conditioned by a number of factors including Kharif crop sown area EL Nino conditions and demand supply mismatches With inputs from PTI