RBI MPC keeps repo rate unchanged at 6.5%

The Reserve Bank of India’s Monetary Policy Committee (MPC) has decided to maintain the policy repo rate at 6.5%. The six-member committee voted with a 5:1 majority to keep the repo rate unchanged in its last meeting of FY24.

Continued status quo

This marks the sixth consecutive meeting where the MPC has opted for a status quo on the repo rate. The decision comes amidst retail inflation persisting above the target of 4%.

Previous MPC decisions

In the previous MPC meeting, held for the fifth consecutive time, the RBI maintained the repo rate at 6.5 percent. The last adjustment occurred in February 2023, when the rate was increased from 6.25 percent.

Key highlights

RBI plans to establish a cloud facility for the financial sector, aimed at bolstering data security and privacy.

Proposed hike in e-mandate for recurring payments to Rs 1 lakh from the current Rs 15,000.

India is deemed better positioned to withstand uncertainties compared to many other countries, according to RBI.

RBI commits to remain vigilant and ready to act, in line with the evolving outlook.

With forex reserves standing at $604 billion as of December 1, RBI expresses confidence in meeting external financing requirements comfortably.

The relative stability of the rupee reflects improving macroeconomic fundamentals and resilience in the face of global challenges.

Rupee exhibited low volatility compared to its emerging market peers throughout 2023.

Intermittent vegetable price shocks may impact headline inflation in November and December, with inflation outlook influenced by uncertain food prices.

RBI retains the average retail inflation projection at 5.4% for FY24 and pegs GDP growth in December and March quarters at 6.5% and 6%, respectively. Additionally, it hikes the GDP growth projection for the current fiscal to 7% from the previous 6.5%.

Proposal to enhance UPI transaction limit for payments to hospitals and educational institutions from Rs 1 lakh to Rs 5 lakh.