RBI Governor Shaktikanta Das on Thursday announced that the Indian central bank will not hike its lending rates, contrary to what market watchers and economists were expecting. The central bank has also projected faster growth as well as softer inflation for this fiscal. Here are the highlights of the RBI governor's speech on Thursday:
Repo Rate | RBI Governor Shaktikanta Das on Thursday said the Indian central bank will not hike its lending rates, contrary to what market watchers and economists were expecting. The repo rate remain unchanged at 6.5 percent.
Unanimous decision | The RBI increased the repo rate by 250 bps in the last 11 months to combat inflation. Das said the MPC's actions since May last year are still working through the system. "The MPC decided to keep the rate unchanged to assess the progress made so far while closely monitoring the inflation outlook," he said.
Withdrawal of accommodation | The RBI governor said that the central bank will keep an eye out on inflation and will maintain its stance at withdrawal of accommodation with an eye on change, if needed in the next policy.
Withdrawal of accommodation | The RBI governor said the MPC voted by five out of six members remain focused on withdrawal of accommodation to ensure inflation aligns with the target, while focusing on growth.
SDF and MSF rates | The RBI governor on Thursday said the standing deposit facility (SDF) rate is unchanged at 6.25 percent. Moreover, the marginal standing facility (MSF) and bank rates have also been left unchanged.
Growth | The FY24 GDP growth was forecast was increased to 6.5 percent from the previous 6.4 percent. The real GDP growth for the first quarter is forecast at 7.8 percent, for the second quarter is 6.2 percent, for the third and fourth quarters it is 6.1 percent and 5.9 percent, respectively.
Inflation | The RBI MPC has lowered the inflation for this fiscal year from 5.3 percent to 5.2 percent. The RBI MPC has projected inflation for the first quarter of this fiscal at 5.1 percent, 5.4 percent for the second and third quarters and 5.2 percent for the fourth quarter, Das said.
War against inflation not over | The governor also stressed that the war against inflation has to continue until there's a durable decline
Liquidity management | The RBI rate hike shows that the central bank wants to maintain the current level of liquidity in the system and the governor said so in his policy speech on Thursday.
CAD | The RBI governor said the CAD in the third quarter narrowed significantly on a quarter-on-quarter basis. The RBI expects the CAD to remain moderate in the fourth quarter of FY23 and in this fiscal as well.
