RBI hikes repo rate by 25 basis points to control inflation; real GDP growth for FY24 projected at 6.4%

RBI hikes repo rate by 25 basis points to curb inflation; Real GDP growth for FY24 is projected at 6.4%
The Reserve Bank of India on Wednesday hiked the repo rate by 25 basis points to 6.5%, Governor Shaktikanta Das announced the decision of the 6-member monetary policy committee passed by a majority of 4 members. This is the first fiscal policy statement of the year. In December 2022, the repo rate was raised by 0.35 percentage points to 6.25%. There is no change in the reverse repo rate at 3.35 per cent.

Real GDP growth is projected at 6.4% for 2023-24, 7.8% in Q1, 6.2% in Q2, 6% in Q3 and 5.8% in Q4.

The fixed deposit facility rate will be revised to 6.25%, marginal facility rate and bank rate will be revised to 6.75%. The MPC decided by a 4 out of 6 majority to focus on withdrawing accommodation to ensure inflation remains within target going forward while supporting growth.

Das said the global economic outlook is not as bad as it was a few months ago. Inflation is still above target in major economies. The situation is fluid and uncertain, Das said.

India’s economy remains resilient, RBI Governor Shaktikanta  Das said, with real GDP growth estimated at 7% in 2023-23.

“While inflation is expected to remain moderate in 2023-24, it will remain above the 4% target. The outlook is clouded by geopolitical tensions, global financial market volatility, rising non-oil commodity prices and volatile crude oil. The outlook remains clouded. ,” Das said.