Mumbai: Reserve Bank of India (RBI) kept the policy rate unchanged at 6.5 percent for the 11th consecutive time on Friday. Economic development 2024-25 forecast to 6.6% from 7.2% earlier, and reduced Cash reserve ratio (CRR) to 4% from a base of 50, which is expected to release about Rs 1.6 lakh crore to banks and help moderate lending rates.
The sharp drop in GDP growth forecasts comes against the backdrop of a slowdown in economic growth for the second quarter, which fell to a seven-quarter low of 5.4 percent. The RBI also raised its inflation forecast for FY25 to 4.8% from 4.5%.
“Since the previous policy, inflation has picked up, while growth has moderated. Accordingly, the MPC has taken a cautious and cautious approach at this meeting to await better visibility on the growth and inflation outlook. adopted. A turning point, prudence, pragmatism and timing of decisions become even more important,” RBI Governor Shakti Kanta Das This was said in a statement after the Monetary Policy Committee meeting.
In the Monetary Policy Committee meeting, two members voted in favor of a rate cut while four others supported the status quo.
CRR refers to the portion of deposits that is seized by RBI to maintain liquidity buffer and control money supply. gave CRR deduction It will happen in two phases in the second half of December. The CRR was earlier raised to 4.5% in May 2022 following market volatility due to Russia’s invasion of Ukraine.
Das said growth is expected to accelerate in the coming quarters. Das said growth is expected to accelerate in the coming quarters. “Going forward, the high-frequency indicators available so far suggest that the slowdown in domestic economic activity ended in Q2:2024-25 and has since recovered, supported by strong festive demand and Rural activity has picked up. Agricultural growth is supported by healthy kharif crop production, higher levels of reserves and improved rabi sowing. Industrial activity is expected to return to normal and recover from the low level of the previous quarter will,” Das said.
Expectations for a rate cut brightened after growth fell to a nearly two-year low in the July-September quarter and calls for a rate cut came amid a slowdown in urban consumption due to strong inflationary pressures. are growing Before launching his formal monetary policy statement, Das strongly defended inflation targeting and the monetary policy framework.
Senior ministers in the government have called for a rate cut and indicated that the central bank should not be swayed by high food inflation, which they attributed to supply-side and weather-related issues. gave “We are in regular discussions with the government on inflation and supply-side issues. The RBI Act requires us to target headline inflation, we target core, food, or fuel inflation. “The headline inflation target is included in the law,” Das said.