Mumbai: Reserve Bank Governor Shaktikanta Das on Thursday made it clear that the decision to hold rates should be seen as a pause, and not as a pivot. The rate-setting Monetary Policy Committee (MPC) will act on the rates as and when necessary, Das said.
"If I have to characterise today's monetary policy in just one line...it's a pause, not a pivot," Das told reporters in the customary interaction with reporters after the announcement of the policy review. Earlier in the day, the six-member MPC voted unanimously to keep the repurchase or repo rate unchanged at 6.50 per cent, surprising analysts who were expecting the central bank to make a final 25 basis points hike before opting to pause.
Das said RBI is keen to assess the cumulative impact of the rate actions done till now. There has been a cumulative hike of 250 basis points since May 2022. Deputy Governor Michael Patra said RBI has marginally upped its FY24 growth estimate to 6.5 per cent primarily on assumption of a decline in the average oil price to USD 85 per barrel as against USD 90 per barrel earlier.
The Reserve Bank marginally raised India's economic growth projection for the current financial year to 6.5 per cent on back of higher Rabi crop output, moderating commodity prices, and the government's plan of higher capital expenditure. The Reserve Bank of India (RBI) had earlier projected the gross domestic product (GDP) at 6.4 per cent.
India's GDP is expected to have recorded a growth of 7.0 per cent in 2022-23. Announcing the first bi-monthly monetary policy of 2023-24, RBI Governor Shaktikanta Das said the higher Rabi production has brightened the prospects for agriculture sector and rural demand. The steady growth in contact-intensive services should be positive for urban demand, he said, adding that the government's focus on capital expenditure, capacity utilisation above long-period average and moderating commodity prices should bolster manufacturing and investment activity. (With agency inputs)
