The RBI is remitted to maintain the CPI inflation charge at 4 per cent, with a flexibility of two per cent up or down. (Photo: Reuters)
RBI Governor Shaktikanta Das says the worldwide financial system is witnessing a renewed section of turbulence with recent headwinds from the banking sector turmoil in superior economies
The RBI MPC on Thursday unanimously determined to maintain the repo charge unchanged at 6.50 per cent. The pause comes after six consecutive charge hikes since May 2022, and the RBI has raised the repo charge by 250 bps since then. The RBI MPC additionally voted to stay focussed on ‘withdrawal of accommodation’ by 5:6 majority. This is to make sure that inflation aligns with goal whereas focussing on progress.
While presenting the primary bi-monthly financial coverage assertion of FY24, RBI Governor Shaktikanta Das on Thursday stated, “The world financial system is witnessing a renewed section of turbulence with recent headwinds from the banking sector turmoil in superior economies.”
SDF will remain unchanged at 6.25 per cent, and MSF and Bank Rates will be maintained at 6.75 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.
The reverse repo charge and CRR additionally remained unchanged at 3.35 per cent and 4.5 per cent, respectively.
On inflation, he said the global inflation has moderated in the recent month. In India, the RBI governor said that the retail inflation is expected to moderate to 5.2 per cent for FY24, from 5.3 per cent projected earlier. The inflation is expected to be at 5.1 per cent in Q1.
He also said the current financial year points towards softening of inflation; war against inflation to continue until there is durable decline.
On GDP growth, the RBI marginally raised economic growth projection for FY24 to 6.5 per cent from earlier estimate of 6.4 per cent.
The RBI is mandated to keep the CPI inflation rate at 4 per cent, with a flexibility of 2 per cent up or down. However, according to the latest data available, India’s CPI inflation in February 2023 stood at 6.44 per cent, which is beyond the RBI’s upper limit of 6 per cent for the second consecutive month. The retail inflation had stood at 6.52 per cent in January 2023.
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