Governor Shaktikanta Das announced the second bi-monthly monetary policy for the financial year 2024-25 at 10 am on Friday. The announcement will be followed by a post-policy news conference at noon.
This is the RBI’s first policy announcement since the 2024 Lok Sabha election results.
The Monetary Policy Committee (MPC), chaired by Governor Das, met in Mumbai this week to deliberate on key policy decisions amid a challenging economic outlook.
While speaking, Governor Das added, “The Monetary Policy Committee (MPC) met on June 5, 6 and 7, 2024. After a detailed assessment of the evolving macroeconomic and financial developments and outlook, decided by a majority of 4 to 2 to keep the policy repo rate unchanged at 6.50 percent.”
According to ANI reports, the central bank’s stance on the benchmark interest rate has attracted significant attention, particularly given the persistent inflationary pressures, especially in the food sector.
The RBI repo rate, since its last increase in February 2023, currently remains at 6.5. It is widely expected to remain unchanged for the eighth consecutive bimonthly policy review.
M. Govinda Rao, former director of the National Institute of Public Policy and Finance and member of the Fourteenth Finance Commission, said: “The MPC is widely expected to maintain the policy rate in the eighth consecutive meeting.” According to ANI, “the inflation rate, particularly that of food, remains much higher than the target of 4 percent,” he added.
Food inflation has been a persistent concern, with rural areas seeing a 0.59 percent increase and urban areas seeing a 1.03 percent increase in April, leading to a combined national rise in inflation. of food of 0.74 percent.
This trend underscores the challenges the central bank faces in maintaining price stability.
The agricultural industry is optimistic despite these inflationary pressures. In the coming months, the forecast of an above-average monsoon and expected improvements in agricultural production may serve to reduce food inflation.
“Looking ahead, the forecast of an above-normal southwest monsoon by the India Meteorological Department (IMD) is expected to boost kharif production and replenish reservoir levels,” he said according to a statement released by the RBI on Friday.
Addressing global growth and inflation in the statement, RBI Governor Das said, “Global growth is maintaining its momentum in 2024 and is likely to remain resilient, supported by recovery in global trade.”
“Inflation is declining, but the final leg of this journey toward disinflation may be difficult,” he added.