RBI Monetary Policy December 2023: Repo rate left unchanged at 6.5% for the fifth time

RBI Monetary Policy Meet December 2023: For the fifth time in a row, the Reserve Bank of India Monetary Policy Committee has kept the repo rate unchanged at 6.5% and the withdrawal of accommodation stance has been maintained which means the RBI has decided to reduce the money supply in the system to rein in Inflation.

RBI MPC Meeting Dec 2023: Repo Rate unchanged

The decision by the MPC indicates the way forward for RBI as for the remainder of the financial year as it seeks to bring inflation under the 4% target. The RBI had increased the RBI repo rate in the last quarter of FY23 by 25 basis points under the liquidity adjustment facility. Since then the interest rate has been kept unchanged.

RBI MPC Meet Dec 2023: Shaktikanta Das on inflation

There has been broad-based easing in core inflation, which is indicative of successful disinflation through monetary policy actions, said Das. He added that the near-term outlook however is masked by risks to food inflation, which might lead to an inflation uptick in November and possibly in December. This needs to be watched for second-round effects, if any.

Economic Projections

The real GDP projection is also raised. For FY24 the forecast is raised to 7% from 6.5% while the CPI inflation is projected at 5.4%. The GDP for thrid quarter of FY24 will be 6.5%, and 6% for Q4. The CPI inflation projection for Q3 is at 5.6% and Q4 at 5.2%

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