The Reserve Bank of India (RBI) has maintained the benchmark interest rate at 6.5% for the ninth consecutive time, signalling its continued commitment to withdrawing the accommodative monetary policy stance.
In the announcement of the third bi-monthly monetary policy for the current financial year, RBI Governor Shaktikanta Das stated that the Monetary Policy Committee (MPC) has chosen to keep the repo rate unchanged.
Shaktikanta Das indicated that a degree of relief in food inflation is anticipated due to the pickup in the southwest monsoon and healthy progress in Kharif sowing. He also noted that buffer stocks of cereals remain above the required norms.
Das said, "Global food prices showed signs of easing in the month of July after registering an increase since March 2024."
"Assuming a normal monsoon and taking into account the 4.9 per cent inflation print, Q1 CPI inflation for the current financial year (2024-25) is projected at 4.5 per cent, with q2 at 4.4 per cent, Q3 at 4.7 per cent and Q4 at 4.3 per cent. CPI inflation for the first quarter of next financial year (Q1 2025-26) is projected at 4.4 per cent,” he added.
Regarding economic growth, Das projected real GDP growth of 7.2% for the fiscal year 2024-25, with headline inflation easing to 5.1% in June. "Real GDP growth for 2024-25 is estimated at 7.2%, with Q1 at 7.1%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%. For Q1 2025-26, real GDP growth is also projected at 7.2%. The risks are evenly balanced," he added.
He also acknowledged a slight moderation in the growth projection for the first quarter of the current financial year compared to the June MPC forecast, attributing this to updated high-frequency indicators that reveal lower-than-expected corporate profitability, government expenditure, and core industry output.
The inflation landscape reflects mixed signals, to which Das said, "Headline inflation eased up to 5.1 per cent in June 2024 due to higher than expected food inflation. Fuel remained in deflation for the 10th consecutive month. Core inflation moderated to a historic low in the months of May and June."
