Sat. May 18th, 2024

The RBI has decided to keep its key lending rate unchanged at 6.5% for the fourth consecutive time. The decision was made at the central bank’s bi-monthly Monetary Policy Committee meeting. This also means that loan interest rates are likely to remain unchanged. RBI Governor Shaktikanta Das stated that while inflation is expected to ease in September, there are uncertainties in the overall outlook. The retail inflation for the current financial year is projected to be 5.4%, reducing to 5.2% in the next fiscal year. However, food inflation may not see significant easing in the October-December quarter. The MPC meeting took place against the backdrop of inflation touching 6.83% in August, with the figure for the current month yet to be released. The government has instructed the central bank to maintain retail inflation at 4% with a margin of 2% on either side. Das highlighted that the monetary policy should be ready to tackle sudden food and fuel price rises and noted the resilience of the domestic economy driven by strong demand. The RBI kept the GDP growth forecast for the current financial year at 6.5%. Das also mentioned that the banking system remains resilient with improved asset quality and that open market operations for government securities may be considered to manage liquidity. He concluded by stating that India is poised to become a new growth engine for the world.

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