The Reserve Bank of India's Monetary Policy Committee held its benchmark repo rate steady at 6.50% on 8 February 2024, marking the sixth consecutive meeting at which the rate has remained unchanged. The committee also maintained its policy stance as one of withdrawal of accommodation, reaffirming its commitment to durably aligning inflation with the central bank's 4% target, within a tolerance band of 2% to 6%. The decision was taken by a 5–1 majority, with external member Jayanth R. Varma voting for a 25-basis-point cut and a change of stance to neutral.
The committee's communiqué, published on the RBI's website, said that large and repetitive food price shocks were interrupting the pace of disinflation and that monetary policy must continue to be actively disinflationary to ensure the anchoring of inflation expectations.
ACCOMMODATION WITHDRAWAL STANCE INTACT
The resolution noted that emerging market economies were facing currency fluctuations amid volatile capital flows, and cited volatility in international financial markets as a risk.
Food price volatility remains a key source of uncertainty in the inflation outlook. The MPC said it would carefully monitor any signs of food price pressures spreading to non-food prices, which could erode the gains from easing core inflation, which fell to a four-year low of 3.8% in December. The committee also noted that global commodity price movements, including crude oil, remain a risk factor to watch in the months ahead.
GDP GROWTH PROJECTED AT 7.0%
On the growth side, the RBI projected GDP growth of 7.0% for the fiscal year 2024-25. Momentum in investment demand, optimistic business sentiment and rising consumer confidence were cited among the positive drivers. The RBI projected CPI inflation of 4.5% for 2024-25.
The committee said it would remain resolute in its commitment to aligning inflation to the target, while supporting growth.