The Reserve Bank of India (RBI) recently had a meeting to decide on interest rates. The governor, Shaktikanta Das, announced that they’ve decided to keep the repo rate unchanged at 6.5%. This means they’re not changing the rate at which banks borrow money from the RBI. This decision comes after the two-day review meeting of the RBI’s Monetary Policy Committee (MPC).
What were the key decisions made by the RBI’s MPC during its February meeting?
In the previous meeting in February 2024, the RBI also decided to keep the rates the same. However, not everyone agreed on this decision. One member of the committee suggested lowering the rates by 25 basis points, but the overall decision was to maintain the status quo.
Here are the key points from the RBI MPC Meeting:
1. Repo Rate: The Reserve Bank of India decided to maintain the repo rate at 6.50 per cent, indicating stability in borrowing costs for banks.
2. GDP Forecast: The RBI provided updated forecasts for India’s Gross Domestic Product (GDP) growth, reflecting its assessment of the economic outlook.
3. Inflation Forecast: The MPC likely discussed inflation trends and provided forecasts for future inflation levels, guiding monetary policy decisions.
4. Accommodative Stance: The stance of monetary policy, whether accommodative, neutral, or tight, is an important factor in guiding future rate decisions and supporting economic growth.
5. Foreign Exchange Reserves: Updates on the level of foreign exchange reserves held by India were likely discussed, reflecting the country’s ability to manage external shocks and stabilize the currency.
6. FPI Outflows: The MPC may have addressed the recent trends in Foreign Portfolio Investment (FPI) flows, providing insights into capital movements and their impact on financial markets and the economy.
Overall, the decision to maintain the repo rate, along with forecasts and assessments related to GDP, inflation, accommodative stance, foreign exchange reserves, and FPI outflows, reflects the MPC’s efforts to balance economic growth with price stability and financial stability.
