The Reserve Bank of India (RBI) announced its latest monetary policy updates today, with a key revision to the GDP growth projection for FY25. The central bank has lowered its GDP growth estimate from 7.2% to 6.6%, citing rising inflationary pressures, global uncertainties, and subdued economic activity in recent quarters.
Key Takeaways from the Monetary Policy Update:
- GDP Growth Outlook:
- The revised GDP growth projection for FY25 reflects concerns over slower-than-anticipated economic recovery. The Q2 FY25 real GDP growth was reported at 5.4%, a seven-quarter low, underlining the challenges faced by the economy.
- Monetary Policy Decisions:
- Repo Rate: Held steady at 6.5%, marking the eleventh consecutive meeting without a change.
- SDF Rate: Retained at 6.25%.
- MSF and Bank Rate: Maintained at 6.75%.
- Inflationary Concerns:
- The RBI highlighted the persistence of high inflation, which continues to erode disposable incomes and dampen consumer spending. The MPC remains committed to balancing inflation control with growth imperatives.
- Global Economic Environment:
- Governor Shaktikanta Das noted that financial markets have remained volatile due to a hardening US dollar and capital outflows, creating headwinds for emerging markets, including India.
- Protectionist policies and geopolitical tensions have added to the uncertainty, potentially impacting global trade and economic activity.
- Commitment to Stability:
- The RBI reiterated its commitment to maintaining price stability as a foundation for long-term economic growth. Das emphasized that durable price stability is essential for building strong economic foundations.
- Economic Resilience:
- Despite the challenges, the global economy has displayed resilience in 2024, driven by adaptation to external shocks and sustained demand in certain sectors.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.
