Friday, May 24

RBI’s Monetary Policy Update for October: Repo Rate Stays at 6.5%

In the latest update on the Reserve Bank of India’s monetary policy for October, it has been announced that the repo rate will remain unchanged at 6.5%. The Monetary Policy Committee (MPC) made this decision to maintain the status quo on interest rates. This means that the cost of borrowing money from the central bank will remain the same for commercial banks. The RBI aims to support economic growth while keeping inflation within a manageable range with this policy stance.

RBI Monetary Policy Updates: MPC Decisions for October Unveiled, Repo Rate Unchanged at 6.5%

The Reserve Bank of India (RBI) Governor, Shaktikanta Das, has announced the decisions made during the Monetary Policy Committee (MPC) meeting held over three days. The MPC unanimously decided to keep the policy repo rate unchanged at 6.50%. This decision follows the trend of maintaining the status quo on interest rates, as repo rates have remained unchanged in the previous three policy meetings, including the one in August. Over the past year, the repo rate has increased by 250 basis points (bps).

 

RBI's Monetary Policy Update for October: Repo Rate Stays at 6.5%
RBI’s Monetary Policy Update for October: Repo Rate Stays at 6.5%

 

The repo rate remains at 6.50%, while other rates include the standing deposit facility rate at 6.25%, marginal standing facility rate at 6.75%, bank rate at 6.75%, and fixed reverse repo rate at 3.35%. RBI Governor Shaktikanta Das’ press conference announcing these decisions can be watched live, and updates are available through a Hindustan Times live blog.

The RBI’s primary aim is to align inflation with a durable target while supporting economic growth, with a target inflation rate of 4%. Despite the changes in the macroeconomic and financial landscape, the RBI emphasizes its commitment to this 4% target. In terms of inflation projections, the RBI forecasts a Consumer Price Index (CPI) inflation of 5.4% for Q1 FY 2023-24, 6.4% for Q2, 5.6% for Q3, and 5.2% for Q4. For Q1 2024-25, CPI inflation is projected at 5.2%.

Regarding Gross Domestic Product (GDP) growth forecasts, the RBI’s projections remain unchanged for different quarters of FY 2024. Q1 FY24 is expected to see 6.5% growth, followed by 6.5% in Q2, 6% in Q3, and 5.7% in Q4. Additionally, Governor Das reported that headline inflation for the first quarter of the current financial year stood at 4.6%, a notable decrease from 7.3% in Q1 2022-23.

In addition to the monetary policy decisions, the RBI introduced new channels for Card-on-File Tokenisation (CoFT), which will provide convenience to cardholders for creating and linking tokens to their existing accounts with various e-commerce applications. While the RBI has not officially confirmed whether the e-Burgman electric scooter will be launched in India, the country’s electric scooter market is expanding rapidly. Suzuki has also unveiled a hydrogen-fueled Burgman scooter, marking its commitment to achieving carbon neutrality through hydrogen engines.

Lastly, it’s noteworthy that the repo rate has remained unchanged at 6.50% in the recent monetary policy announcements, aligning with the RBI’s efforts to support economic growth while keeping inflation within its target range.

Here are the highlights of the RBI’s recent Monetary Policy Committee (MPC) meeting:

  1. Repo Rate Unchanged: The RBI governor, Shaktikanta Das, announced that the MPC unanimously decided to keep the policy repo rate unchanged at 6.50%. This means the cost of borrowing money remains the same.
  2. Previous Decisions: In the previous meeting in August, the repo rate was also maintained at 6.50%. The RBI has kept interest rates steady in the last few policy meets, aiming for stability.
  3. Inflation Projections: RBI projects Consumer Price Index (CPI) inflation at 5.4% for Q1 FY 2023-24, 6.4% for Q2, 5.6% for Q3, and 5.2% for Q4. The aim is to manage inflation within a target range.
  4. GDP Growth Forecasts: The GDP growth forecasts for different quarters of FY 2023-24 were shared. For Q1 it is 6.5%, Q2 is 6.5%, Q3 is 6%, and Q4 is 5.7%.
  5. Inflation Target: The RBI emphasized that their inflation target is 4%, aiming for a stable inflation rate while supporting economic growth.
  6. New Measures: The RBI plans to introduce Card-on-File Tokenisation (CoFT) creation facilities at the issuer bank level, making it more convenient for cardholders and enhancing security in e-commerce transactions.

Also read: HDFC Bank Shareholders Witness Rs 49,355 Crore Erosion in a Single Trading Session

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