April 2024

Reserve Bank of India Governor Shaktikanta Das-headed rate-setting panel on Friday concluded its three-day Monetary Policy Committee (MPC) review meeting and kept the repo rate unchanged at 6.5 per cent. The MPC decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. It is the first bi-monthly monetary policy of 2024-25. A total of six MPC meetings are scheduled for the fiscal year beginning April 1, 2024. With a majority of 5:1, the committee decided to keep the repo rate unchanged at 6.5%. RBI has forecast Indian economy to grow at 7 per cent in FY25. The Committee sees Q1FY25 growth rate at 7.1%, Q2 at 6.9%, Q3 and Q4 at 7% each, with risks evenly balanced. CPI inflation projection left unchanged for FY25 at 4.5%. Forex reserves at an all time high of $645.6 billion as of March 29. Inflation: The ‘Elephant in the room’ 2 years ago the elephant in the room was inflation.The elephant has now gone out for a walk and appears to be returning to forest. Inflation is moving closer to targets but the last mile is turning out to be challenging. Core inflation has declined steadily over the past 9 months to its lowest level in the series. “We should not lower our guard but continue to work towards ensuring inflation aligns durably and sustainably to the target. Our goal is in sight and we must remain vigilant,” said Das Indian Rupee: The Indian rupee (INR) was most stable in FY24 among major economies. As compared to the previous 3 years, INR exhibited lowest volatility in 2023-24. INR stability mirrors strong fundamentals, financial stability, and external improvements. On global economy: The global economy exhibits resilience and is likely to maintain its steady growth in 2024. Equity markets are rallying, while sovereign bond yields and the US dollar are exhibiting bidirectional movements. Rural economy: Outlook for the rural areas appears bright, said Das Food prices: Early indication of normal monsoon augurs well for kharif season, said Das “On the other hand, the increasing incidence of climate shocks remainsa key upside risk to food prices,” Das added. An expected normal south-west monsoon should support agricultural activity. Low reservoir levels, especially in the southern states and outlook of above normal temperatures during April-June, also pose concern. Pulses and vegetable prices require close monitoring. Apr 05,2024 Source: Economic Times