SME Editorial
The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday decided to keep the repo rate unchanged at 6.50 per cent for the fifth consecutive time. The growth projection has been raised to 7 per cent for the current financial year from 6.5 per cent earlier, Governor Shaktikanta Das announced.
“Monetary policy will remain actively disinflationary,” Das said announcing the monetary policy statement of the central bank. He added that the vote on the repo rate decision was unanimous.
The repo rate is the rate through which the RBI lends money to commercial banks.
GDP growth
The growth projection has been raised to 7 per cent for the current financial year from 6.5 per cent earlier.
The central bank projected the Consumer Price-based Inflation (CPI) based retail inflation at 5.4 per cent for the current fiscal.
India’s economy grew 7.6% in the July-September quarter, much faster than the polled median of 6.8% and RBI’s estimate of 6.5%, helped by government spending and manufacturing, raising bets that Asia’s third-largest economy will outperform its own estimates for the full year.
Inflation
The RBI projects retail inflation at 5.4% in FY24, the Governor announced.
“As 2023 comes to an end, global economy showing signs of a slowdown,” he said. The RBI had raised the repo rate by a total 250 basis points (bps) since May 2022 in efforts to cool surging inflation, which dropped to a four-month low of 4.87% in October, but is expected to remain above the RBI’s 4% medium-term target for some time.
The RBI also maintained its policy stance of “withdrawal of accommodation” to ensure inflation progressively aligns with the committee’s target while remaining supportive of economic growth.
The MPC meeting took place against the backdrop of inflation declining to 4.87 per cent in October. The November print of inflation is expected to be released next week.
Nifty, Sensex hold gains after MPC keeps rates unchanged
Shares held gains on Friday, with the benchmark indexes Nifty 50 and Sensex hitting fresh record highs, after the RBI’s announcement, Reuters reported.
The NSE Nifty 50 index added 0.37% to 20,976.70 points, while the S&P BSE Sensex was up 0.36% to 69,770.14 as of 10:10 a.m. IST.
As per the statement, domestic economic activities are holding up well while risk to food inflation remains. “Indian economy presents a picture of resilience, momentum; fundamentals remain strong,” the RBI governor said.
