RBI MPC Expected to Maintain Repo Rate; Key Focus on Inflation Commentary

RBI Governor Shaktikanta Das

RBI MPC Expected to Maintain Repo Rate: The Reserve Bank of India has finally announced the new Monetary policy on Friday, June 7. It was announced by Governor Shaktikanta Das, that this marks RBI's first development after the Lok Sabha election.

As the new monetary policy was announced, It didn’t have any effect on the interest rate.

The Repo rate remained unchanged, it remains at 6.5 %. They are focusing on inflation because policy is unclear after an unexpected election result. The central bank kept its 4.5% inflation estimate for FY25.

However, RBI has put its focus more on GDP growth by increasing its forecast to 7.2% for FY25.

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This development comes after a rise in food inflation of 0.74 % was recorded in rural and urban areas in April.

Gov. Shaktikanta Das also said that the central bank will make more efforts to limit unsecured loans and payments. He said that there are certain fees without giving the right information.

He also decided to introduce a digital payments intelligence platform so that the whole system could share data in real time.

He announces that to properly evolve interest rates to preserve financial stability, RBI will keep flexible liquidity management and will use the right way to change frictional and lasting liquidity.

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RBI decided to make the FEMA rules on the export and import of goods and services more logical because it will make it easier to do business and give Authorized Dealer Banks more operating freedom.

RBI to improve the experience of receiving or paying smaller amounts of money has made UPI Lite part of the e-mandate framework which will allow users to automatically add money when the amount drops below the set limit.

RBI Governor Das also noted that the central bank has many tools to control the inflow of foreign funds as Indian government bonds have become a part of the JP Morgan index.

Soon after the announcement of the policy Sensex and Nifty 50 got increased by more than 1 percent.

However, experts also report significant changes in its next monetary policy announcement on August 8.

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