India central bank keeps key interest rates, GDP forecast unchanged
MUMBAI (ICIS)–India’s central bank maintained its benchmark interest rate on Thursday, along with its GDP growth projection for the fiscal year 2023-2024 at 6.5% amid easing inflationary pressures.
This was the second time that the Reserve Bank of India (RBI) maintained the repurchase (repo) rate unchanged at 6.5%, after delivering six consecutive rate hikes since May 2022.
“The cumulative rate hike of 250 basis points undertaken by the monetary policy committee (MPC) is transmitting through the economy and its fuller impact should keep inflationary pressures contained in the coming months,” RBI governor Shaktikanta Das said.
The committee also retained its 6.5% GDP growth forecast for the fiscal year ending March 2024 at 6.5%, with quarterly growth projected to slow down steadily from a high of 8% in the first quarter.
Retail inflation for the current fiscal year is projected at 5.1%, down from 5.2% projected in April.
“We need to move towards our inflation target of 4%,” Das said adding that the inflation is expected to remain above 4% during the current financial year.
“Headline inflation is projected to decline in 2023-24 from its level in 2022-23 but would still be above the target, warranting continuous vigil,” he said.
In April, the consumer price index-based (CPI) inflation had declined to an 18-month low of 4.7%.
While India’s economic activity has remained resilient and has surpassed previous projections, the same cannot be said of the global economy, Das said.
India recorded a GDP growth of 7.2% in 2022-23, beating earlier estimates of a 7% growth.
“RBI recognises that the pace of global economic activity is expected to decelerate on the back of elevated inflation, geo-political tension and tight financial conditions,” Das said.
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