RBI holds rates amid food inflation fears
Reserve Bank of India (RBI) Friday maintained policy interest rates and its monetary stance for the eighth straight review meeting amid concerns of a likely spike in food prices, but cracks in Monetary Policy Committee widened with two of the six panel members favouring easier money.
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It also raised the forecast of economic growth for the fiscal year to 7.2% from 7% earlier, arguing that state-initiated investments into capital assets will draw more private money into capacity building while consumption — the most durable pillar of economic expansion — becomes more broad-based. Equity indices surged after Mint Road raised FY25 growth estimates.
However, inflation remained a bother for the central bank with an uptick in prices of global commodities, and the potential impact of rains on food prices, pushing behind the start of an easing cycle.
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The repo rate — or the rate at which the central bank lends to banks — will remain at 6.5% as four members voted for status quo. All other rates also remain where they were.
Meanwhile, the division in the MPC widened with external member Ashima Goyal joining JR Varma in voting in favour of a quarterpoint cut and a shift in the existing monetary stance of ‘focused on the withdrawal of accommodation’. A basis point is a hundredth of a
