Reserve Bank of India (RBI) Governor Shaktikanta Das.
In April, the Reserve Bank of India had marginally revised upwards the 2023-24 GDP growth projection to 6.5%, from its earlier forecast of 6.4%.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), on the basis of an assessment of the current and evolving macroeconomic situation, on June 8 decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%.
The standing deposit facility (SDF) rate remains unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%, RBI Governor Shaktikanta Das said.
This is the second time that the policy rate has been paused after a 250 basis point conservative rate hike to curb inflation.
The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth, he said.
“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth,” he added.
On the outlook, Mr. Das said going forward, the headline inflation trajectory was likely to be shaped by food price dynamics. Wheat prices could see some correction on robust mandi arrivals and procurement.
Milk prices, on the other hand, are likely to remain under pressure due to supply shortfalls and high fodder costs. The forecast of a normal south-west monsoon by the India Meteorological Department (IMD) augurs well for kharif crops; however, the spatial and temporal distribution of the monsoon would need to be closely monitored to assess the prospects for agricultural production, he said.