Reserve Bank of India’s (RBI) Governor Shaktikanta Das on Friday said the Monetary Policy Committee (MPC) has decided to keep the policy rate unchanged for the eighth time in a row at 6.5 per cent.

The MPC decided by a majority of 4 out of 6 members to remain focussed on withdrawal of accomodation to ensure inflation progressively aligns to the target while supporting growth, he said.

Notably, the rate increase cycle was paused in April last year after six consecutive rate hikes, aggregating to 250 basis points since May 2022.

In April, announcing the first bi-monthly monetary policy for FY25, the RBI Governor had said the MPC has decided to keep the repo rate unchanged at 6.5 per cent by a majority vote of 5:1.

Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent, and the marginal standing facility (MSF) rate and the bank rate at 6.75 per cent, he added.

The RBI further increased the GDP growth projection for FY25 from its last MPC announcement to 7.2 per cent.

“The GDP growth projection, we have increased it from 7 per cent to 7.2 per cent and the inflation projection, the average for the year, we have retained it at 4.5 per cent as it was in the last MPC meeting,” he said.

For FY25, real GDP growth for Q1 is projected at 7.3 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent and Q4 at 7.2 per cent, he said.

On inflation projection he said, “The outlook on crude oil prices remains uncertain due to geopolitical tensions. Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5 per cent with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent and Q4 at 4.5 per cent.”

“CPI headline inflation softened further during March and April, though persisting food inflation pressures offset the gains of disinflation in core and deflation in fuel groups. Despite some moderation, pulses and vegetables inflation remained firmly in double digits. Vegetable prices are experiencing a summer uptick following a shallow winter season correction,” he said.

“The deflationary trend in fuel was driven primarily by the LPG price cuts in early March. Coal inflation softened for the 11th consecutive month since June 2023. Services inflation moderated to a historic low and goods inflation remained contained,” he added.

The Governor also highlighted that the developments relating to growth and inflation are unfolding as per our expectations.

On the additional measures, he said that the central bank will take further steps to moderate unsecured loans and advances. He noted that few regulated entities were charging certain fees without proper disclosures.

He mentioned that the banking system remains resilient, backed by asset quality and rise in profitability. The Non-Banking Financial Companies (NBFCs) have displayed strong financials in FY24. The banking sector, NBFCs and overall financial sector remain robust.