RBI Maintains Key Interest Rates at 6.50% and Provides Economic Outlook

The Reserve Bank of India (RBI) has kept interest rates unchanged:

– Actual: 6.50%
– Expected: 6.50%
– Previous: 6.50%

In addition, the RBI maintained the Cash Reserve Ratio (CRR) at:

– Actual: 4.50%
– Expected: 4.50%
– Previous: 4.50%

The Reverse Repo Rate also remains unchanged:

– Actual: 3.35%
– Previous: 3.35%

RBI Governor’s Statements:

– The Governor stated that inflation and growth dynamics are moving favorably.

– He noted that deflation in fuel prices is ongoing.

– Despite these positive trends, food inflation remains elevated.

– The monetary policy must continue to be actively disinflationary to maintain economic stability.

– Sustained price stability is expected to foster a period of high growth.

– It is crucial to anchor inflation expectations and ensure the full transmission of past policy actions.

– Market expectations regarding the timing and pace of interest rate cuts are changing.

– Indian economic activity remains resilient.

– Manufacturing activity is gaining ground.

– Private consumption is recovering, and the services sector has maintained buoyancy.

– The forecast of an above-normal southwest monsoon is expected to boost Kharif crop production.

– For FY25, real GDP growth is projected to be 7.2%, up from a previous forecast of 7%.

– Real GDP growth for Q2 FY25 and Q3 FY25 is projected at 7.3% and 7.2%, respectively.

– Despite a moderation, inflation in pulses and vegetables remains in double digits.

– Global food prices have started to inch up.

– RBI Governor says uncertainties related to the food price outlook warrant close monitoring.

– RBI Governor states the second half of the year will see some correction in headline inflation.

– RBI Governor notes that supply-side developments and government measures have also helped in moderating headline inflation.

– RBI Governor projects CPI inflation at 4.9% in Q1 FY25, 3.8% in Q2 FY25, and 4.6% in Q3 FY25.

– RBI Governor indicates the outlook on crude oil prices remains uncertain.

– RBI Governor emphasizes the need for inflation to descend to the 4% target on a durable basis.

– RBI Governor says headline CPI continues to be on a disinflationary trajectory.

– RBI Governor projects FY25 CPI inflation at 4.5%.

– RBI Governor affirms commitment to maintaining stability in all segments of financial markets and regulated entities.