Reserve Bank of India Keeps Interest Rates Unchanged, Focuses on Inflation and Growth
The Reserve Bank of India (RBI) has decided to keep the policy repo rate unchanged at 6.5%, according to Governor Shaktikanta Das. The Monetary Policy Committee (MPC) will focus on withdrawing the accommodative policy stance and keeping a close watch on the inflation situation. Das emphasized the need to continue prompt and appropriate policy action to keep inflation within the target range of four percent.
Here are the key takeaways from the RBI’s recent announcement:
Constant Watch on Inflation: Due to the geopolitical situation, the global economic activities’ pace is expected to slow down. The core inflation is above the target of four percent and is expected to remain above the target for the entire year. Thus, it is essential to keep a constant and close watch on the inflation situation.
Rural Demand Improving: The GDP growth rate for the current financial year 2023-24 is estimated to be 6.5 percent. The RBI expects the GDP growth rate to be eight percent in the first quarter, 6.5 percent in the second quarter, six percent in the third quarter, and 5.7 percent in the fourth quarter of the financial year. Although the global economy’s uncertainties continue, the Indian economy and financial sector remain strong and combative. Domestic demand conditions remain supportive of growth, with rural demand improving.
Retail Inflation Estimate Reduced: The RBI has reduced the estimate of retail inflation from 5.2 percent to 5.1 percent during the financial year 2023-24.
Overall, the RBI’s decision to keep interest rates unchanged reflects its focus on maintaining stable inflation while supporting growth. The MPC will continue to monitor the evolving situation and take appropriate measures to ensure that inflation remains within the target range.
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