Reserve Bank of India Holds Steady: Maintains Policy Repo Rate at 6.5% in Consecutive Move Amidst Inflation Vigilance

08-12-2023 : On Friday, Governor of the Reserve Bank of India, Shaktikanta Das, unveiled the monetary policy, declaring the central bank’s decision to maintain the policy repo rate at 6.5 percent. This decision, the fifth consecutive instance of rate retention, is indicative of the RBI’s continued emphasis on closely monitoring inflation trends. Governor Das affirmed that the standing deposit facility rate would remain at 6.25 percent, while both the marginal standing facility rate and the bank rate would be retained at 6.75 percent. He underscored the commitment to an “actively disinflationary” monetary policy stance.

One of the notable announcements in the monetary policy statement was the upward revision of the GDP growth projection for the current fiscal year. The initial estimate of 6.5 percent has been revised to a more optimistic 7 percent, reflecting a positive outlook on the economic trajectory.

Addressing future developments, Governor Das outlined the RBI’s projections for retail inflation, setting it at 5.4 percent for FY’24. He provided further granularity by stating that the central bank anticipates retail inflation to be at 5.6 percent in Q3 of FY’24 and 5.2 percent in Q4. These projections indicate a cautious yet optimistic approach to inflation management.

In a move towards enhancing transparency in digital lending, Governor Das announced that the RBI would establish guidelines for web aggregators of loan products. This step aims to bring clarity and standardization to the rapidly growing digital lending sector.

Additionally, Shaktikanta Das revealed plans for the creation of a cloud facility dedicated to the financial sector. This initiative is positioned to streamline and fortify the technological infrastructure supporting financial operations, aligning with the evolving landscape of digital finance.