New Delhi, June 07, 2024.
The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the second bi-monthly monetary policy of the financial year 2024-25 on Friday. This is the first RBI policy after the Lok Sabha election results 2024. The RBI Governor headed six-member Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 6.5% for the eight consecutive time by a 4:2 majority. It also decided to continue with its stance of ‘withdrawal of accommodation’. RBI raised its GDP growth forecast for FY25 to 7.2% from 7% earlier.
Mr. Manish Kothari, President & Head – Commercial Banking, Kotak Mahindra Bank Limited Said “RBI Governor’s focus on ensuring that inflation progressively aligns to its target of 4% on a durable basis – leads to the Reserve Bank keeping the policy rates unchanged as well as maintaining its stance on withdrawal of accommodation! The Governor however alluded to the fact that the Inflation-Growth balance is moving favourably, although food inflation continues to remain elevated. I guess a normal monsoon and lower global commodity price uncertainty may turn out to be the key lever for RBI making a shift in their stance towards a rate cut. There is definitely, for now, a reason to maintain, “Poise, Patience & Perseverance” as the Governor concluded!
The upward revision in FY25 GDP forecast to 7.2% adds to the argument that India’s political situation will remain supportive of economic growth. It is also encouraging to note that in addition to Dr. Jayant Verma, now Dr. Ashima Goyal has also voted for a rate cut. I am hopeful the count of MPC members will increase further, possibly leading to a rate cut in August 2024. An out of cycle decision may not be ruled out as well, now that Canada, Switzerland, Sweden and European Central Bank (ECB) have already cut, and Bank of England (BoE) and US Federal Reserve cuts are a matter of time, said Debopam Chaudhuri, Chief Economist of Piramal Group.
The upward revision in FY25 GDP forecast to 7.2% adds to the argument that India’s political situation will remain supportive of economic growth. It is also encouraging to note that in addition to Dr. Jayant Verma, now Dr. Ashima Goyal has also voted for a rate cut. I am hopeful the count of MPC members will increase further, possibly leading to a rate cut in August 2024. An out of cycle decision may not be ruled out as well, now that Canada, Switzerland, Sweden and European Central Bank (ECB) have already cut, and Bank of England (BoE) and US Federal Reserve cuts are a matter of time, said Debopam Chaudhuri, Chief Economist of Piramal Group.
