RBI Monetary Policy Committee meeting: The Reserve Bank of India (RBI) maintained its 5.4% inflation projection for 2023–2024.
Governor of the RBI, Shaktikanta Das, stated that they are projecting CPI inflation at 5.4% with the fourth quarter that is the current quarter projection of 5%. Now, assuming a typical monsoon for the upcoming year, CPI inflation is predicted to be 4.5% for the upcoming fiscal year 2024–2025, with Q1 at 5%, Q2 at 4%, Q3 at 4.6%, and Q4 at 4.7%.
Governor Das highlighted that headline inflation moderated to an average of 5.5% during April to December 2023, from 6.7% during the whole of 2022.
"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!
However, Das said that the inflation trend was still somewhat volatile due to the increase in food prices. In contrast, the deflation in CPI fuel demand and bought inflation moderated to a four-year low of 3.8%. December saw a broad-based drop in core inflation while overall inflation either remained constant or decreased.
"The inflation trajectory going forward would be shaped by the outlook on food inflation, about which there is considerable uncertainty. Adverse weather events remain the primary risk with implications for the Rabi crop. Increasing geopolitical tensions are also leading to supply chain disruptions and price volatility in key commodities, especially crude oil.
On the positive side, the progress in Rabi sowing has been satisfactory. And it augurs well for the season. Prices have given the troubles, especially onions and tomatoes, are registering seasonal price correction. Taking into account these factors, CPI inflation, which is consumer price headline inflation, is projected at 5.4% for the current year, that is 2023-2024," explained Das.
Das stated that the Monetary Policy Committee (MPC) decided to maintain the policy rate at 6.5% following a thorough evaluation of the macroeconomic and financial developments. Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted to keep the policy repo rate unchanged at 6.50%, while Prof. Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points, as per a statement.
As a result, the bank rate is 6.75%, the marginal standing facility (MSF) rate is 6.25%, and the standing deposit facility rate is at 6.25%.
The MPC also decided, by a majority of five out of six members, to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth, said Das.
Dr. Michael Debabrata Patra, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Shaktikanta Das, and Dr. Shashanka Bhide voted to keep the focus on withdrawal of accommodation in order to sustain development while ensuring that inflation gradually approaches the objective. Professor Jayanth R. Varma voted in favour of keeping a neutral stance.
“MPC will carefully monitor any signs of generalisation of food price pressures, which can fritter away the gains in easing core inflation. Monetary policy must continue to be actively inflationary to align inflation with the target of 4%. The MPC also decided to remain focused on the withdrawal of accommodation to ensure fuller transmission and anchoring of inflation expectations,” explained the Governor.
This is the sixth consecutive unchanged decision and comes after the Interim Budget was announced on February 1, 2024. The RBI MPC commenced its first meeting of the year on February 6, 2024. Chaired by RBI Governor Shaktikanta Das, the six-member MPC concluded discussions today, February 8, 2024. During the last MPC, for the fifth consecutive time, the RBI maintained the repo rate at 6.5%.
The next meeting of the MPC is scheduled during April 3 to 5, 2024.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.