Key Takeaways From RBI MPC Meeting: Repo rate, CPI inflation, GDP forecasts, UPI transaction limits, NBFC, banks and more
Key Takeaways from RBI MPC Meeting: Reserve Bank of India governor Shaktikanta Das kept the repo rate unchanged at 6.50 per cent for the 10th consecutive time. The monetary policy committee (MPC) announced a change in the policy stance to 'neutral'. There was no change in GDP forecast and CPI inflation estimates for FY25.
Key Takeaways from RBI MPC Meeting: For the 10th consecutive time, there was no change in India's repo rate as the Reserve Bank of India (RBI) Governor Shaktikanta Das-led Monetary Policy Meeting (MPC) on Wednesday (October 9, 2024) maintained it at 6.50 per cent. The big change came in the face of the Central Bank changing the policy stance to 'netral' from 'withdrawal of accommodation'. On the other hand, there were no changes in the GDP forecast and Consumer Price Index (CPI) inflation estimates for FY25. In his address on Wednesday, Das said, "The MPC considered it appropriate to change the stance to neutral and remain unambiguously focused on bringing inflation to target durably. Food inflation pressures could see some easing later in the FY." In this write-up, go through the key takeaway decisions that the Central Bank governor took during the 3-day MPC meeting that concluded today.
Photos: Unsplash/Pixabay
Repo Rate
Shaktikanta Das-led MPC maintained the repo rate at 6.50 per cent for the 10th consecutive time.
Monetary Policy Stance
MPC has changed the policy stance to 'neutral'. Earlier, it was 'withdrawal for accommodation' for nine consecutive quarters.
GDP forecast
The RBI MPC has maintained the GDP forecast for FY25 at 7.20 per cent.
GDP forecast for Q2FY25
The RBI has revised GDP forecasts for all four quarters.
For Q2FY25, it has reduced the GDP forecast to 7 per cent from 7.20 per cent.
GDP forecast for Q3FY25
For Q3FY25, the Central Bank has raised the GDP forecast to 7.40 per cent from 7.30 per cent.
GDP forecast for Q4FY25
For Q4FY25, the RBI has raised the GDP forecast to 7.40 per cent from 7.20 per cent.
GDP forecast for Q1FY26
For Q1FY26, it has raised the GDP forecast to 7.30 per cent from 7.20 per cent.
CPI Inflation estimates
The RBI has also kept the CPI inflation estimate unchanged at 4.5 per cent. Das said that a rise in global food and metal prices along with volatility in crude oil prices presents upside risks to India’s CPI inflation trajectory. He, however, said that CPI for September is expected to see a big jump due to unfavourable base effects, and pick-up in food price momentum.
CPI Inflation estimate for Q2FY25
The RBI has also revised CPI inflation estimates for all four quarters.
For Q2FY25, it has reduced the CPI inflation forecast from 4.4 per cent to 4.1 per cent.
CPI Inflation estimate for Q3FY25
For Q3FY25, it has increased the CPI inflation forecast from 4.7 per cent to 4.8 per cent.
CPI Inflation estimate for Q4FY25
For Q4FY25, it has reduced the CPI inflation forecast from 4.3 per cent to 4.2 per cent.
CPI Inflation estimate for Q1FY26
For Q1FY26, it has reduced the CPI inflation forecast from 4.4 per cent to 4.3 per cent.
Adverse risks of inflation can't be underestimated: Das
The RBI governor says that the Central Bank needs to monitor evolving conditions for disinflationary impulses. He says that stress has build a few unsecured loan segments. The RBI is closely monitoring the situation and will take necessary measures on unsecured lending, Das adds.
Few outliers among NBFCs: Das
Speaking about non-banking financial companies, Das says that while the overall NBFC sector remains healthy, there are a few outliers. He says that the Central Bank is closely monitoring these areas and will not hesitate to take action if necessary. "Banks and NBFCs need to carefully assess their individual exposures in unsecured segments. Some NBFCs are aggressively pursuing growth without proper administration. Self-correction by NBFCs could be the desired action," Das says during his speech.
Balance between inflation and growth well-poised: Das
The RBI Governor says that the Central Bank will be nimble and flexible in liquidity management operations.
RBI enhances UPI transaction limits
To encourage wider adoption of UPI, Das says the MPC has decided to enhance the per-transaction limit in UPI123Pay from Rs 5,000 to Rs 10,000; and (ii) increase the UPI Lite wallet limit from Rs 2,000 to Rs 5,000 and per-transaction limit from Rs 500 to Rs 1,000.