RBI Monetary policy committee meeting June 2024 keeps rate steady at 6.5%: Key highlights and outcomes
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The Reserve Bank of India (RBI) held its first Monetary Policy Committee (MPC) meeting since the Lok Sabha Elections 2024. In a significant move, the RBI decided to keep the repo rate unchanged at 6.5% for the eighth consecutive time. The last change in the benchmark interest rate was made in February 2023. Here are the key highlights and outcomes from the RBI MPC Meeting in June 2024.
Key highlights of RBI MPC meeting June 2024
Repo rate unchanged:
The key interest rate (repo rate) remains steady at 6.5%. This decision marks the eighth consecutive time the RBI has held the rate.
Focus on inflation control:
The RBI emphasized the need to withdraw its accommodative monetary policy stance to curb inflationary pressures.
Growth projection upgraded:
The real GDP growth forecast for FY25 has been revised upwards to 7.2% from the previous 7%.
Inflation forecast maintained:
The inflation forecast for FY25 is retained at 4.5%, with food inflation still a significant concern.
Current account deficit:
The current account deficit for FY25 is expected to remain within sustainable levels, ensuring economic stability.
Foreign exchange reserves:
India’s foreign exchange reserves have reached a new high of $651.5 billion as of May 31, 2024.
Bulk deposit threshold raised:
The threshold for bulk deposits has been increased from ₹2 crore to ₹3 crore.
Rationalisation of export and import regulations:
The RBI plans to rationalize export and import regulations under the Foreign Exchange Management Act (FEMA) to streamline trade processes.
Digital payments intelligence platform:
A new Digital Payments Intelligence Platform will be established to leverage advanced technologies for mitigating payment fraud risks.
Auto replenishment of digital wallets:
The RBI has brought the auto replenishment of balance Fastag, NCMC, and UPI-Lite wallets under the e-mandate framework to enhance convenience and security.
The RBI’s decision to keep the repo rate unchanged at 6.5% underscores its focus on balancing growth and inflation. With an upgraded GDP growth projection and maintained inflation forecast, the central bank aims to foster economic stability while addressing inflationary challenges. The upcoming initiatives, including the Digital Payments Intelligence Platform and changes in the bulk deposit threshold, reflect the RBI’s commitment to modernizing and securing India’s financial ecosystem. The next monetary policy announcement is scheduled for August 8.