Reserve Bank of India (RBI) Governor Shaktikanta Das announces the central bank’s monetary policy statement, Thursday, June 8, 2023. | Photo credit: PTI
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), based on an assessment of the current and evolving macroeconomic situation, decided on June 8 to keep the take rate unchanged. repo under the Liquidity Adjustment Facility (LAF). at 6.50%
The Standing Deposit Facility (SDF) rate remains unchanged at 6.25% and the Marginal Standing Facility (MSF) rate and Bank Rate at 6.75%, RBI Governor Shaktikanta said. Das.
This is the second time that the key rate has been suspended after a cautious hike of 250 basis points to curb inflation.
Editorial | Optical Relief: On Global Inflation
The MPC also decided to remain focused on withdrawing accommodation to ensure that inflation gradually aligns with the target, while supporting growth, he said.
“These decisions are in line with the objective of achieving the medium-term consumer price index (CPI) inflation target of 4% within a range of +/- 2%, while supporting the growth,” he added.
As for the outlook, Das said, the trajectory of headline inflation will likely be shaped by food price dynamics. Wheat prices could see a correction due to robust mandi arrivals and purchases.
Milk prices, on the other hand, are expected to remain under pressure due to supply shortages and high feed costs. The prediction of a normal southwest monsoon by the Indian Meteorological Department (IMD) bodes well for kharif crops; however, the spatial and temporal distribution of the monsoon should be closely monitored to gauge crop production prospects, he said.
Read also | World Bank lowers India’s growth forecast to 6.3%, says labor market needs to be more inclusive
“Crude oil prices have fallen but the outlook remains uncertain. According to early results from Reserve Bank surveys, manufacturing, services and infrastructure companies surveyed expect input costs and output prices to tighten,” he said.
Considering these factors and assuming a normal monsoon, CPI inflation has been projected at 5.1% for 2023-24, with Q1 at 4.6%, Q2 at 5.2%, T3 at 5.4% and a T4 at 5.2%. The risks are balanced.
On growth, Das said higher rabi agricultural production in 2022-23, the expected normal monsoon and continued buoyancy in services should support private consumption and overall economic activity over the coming months. the current year.
The government’s focus on capital spending, moderating commodity prices and robust credit growth are expected to boost investment activity. Weak external demand, geoeconomic fragmentation and protracted geopolitical tensions pose risks to the outlook, however, he added.
Considering all of these factors, real GDP growth for 2023-2024 has been projected at 6.5% with Q1 at 8.0%, Q2 at 6.5%, Q3 at 6.0% and Q4 at 5.7%, with balanced risks, he added. .