RBI maintains interest rates amid growing calls for easier money policy
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 the cracks in the Monetary Policy Committee widened in favour of easier money. It surprisingly raised the FY25 growth forecast, sending equity indices higher.
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Despite a relatively higher base, policymakers at Mint Road baked in the prospect of higher consumption and a continued revival in the state-led investment cycle to raise the fiscal year growth forecast by 20 basis points to 7.2%. One basis point is a hundredth of a percentage point.
Inflation remained a bother for the central bank with an uptick in prices of global commodities, which could spill over into higher product prices, and the potential impact of rains on food prices, pushing behind the expectation of the beginning of an easing cycle.
«While the MPC took note of the disinflation achieved so far without hurting growth, it remains vigilant to any upside risks to inflation, particularly from food inflation, which could possibly derail the path of disinflation,» said Governor Shaktikanta Das after the conclusion of the MPC meeting. " We need a descent of inflation to the 4 per cent target on a durable basis."
The Repo rate, the rate at which the central bank lends to banks,
