Page 28 - The Indian EYE 061623

BUSINESS EYE JUNE 16, 2023 | The Indian Eye 28

Reserve Bank keeps repo rate

unchanged as inflation cools of and

growth figures improve

The RBI has lowered India’s inflation projection for 2023-24 to 5.1 per cent against its April estimate of 5.2 per cent

OUR BUREAU
Mumbai/New Delhi
n a big move on Friday, the Re-
serve Bank of India’s (RBI) mon-
Ietary policy committee unani-
mously decided to keep the repo rate
unchanged at 6.5 per cent. The repo
rate is the rate of interest at which
RBI lends to other banks. A consis-
tent decline in inflation (currently at
an 18-month low) and its potential
for further decline may have prompt-
ed the central bank to put the brake
on the key interest rate again.
Most analysts had expected the
RBI to continue to keep the repo rate
unchanged. Inflation has been a con-
cern for many countries, including
advanced economies, but India has
managed to steer its inflation trajec-
tory quite well.
The RBI in its April meeting, the
first in 2023-24, had paused the repo
rate. Barring the April pause, the
RBI raised the repo rate by 250 ba-
sis points cumulatively to 6.5 per cent
since May 2022 in the fight against RBI Governor Shaktikanta Das (right) with Union Finance Minister Nirmala Sitharaman in New Delhi (ANI)
inflation. Raising interest rates is a
monetary policy instrument that typ- while reading out the monetary pol- flatline on Friday morning as market Q3 at 6.0 per cent, and 5.7 per cent.
ically helps suppress demand in the icy statement after a three-day delib- participants had already discounted The RBI governor Shaktikanta Das,
economy, thereby helping the infla- eration. India’s headline inflation has the RBI’s monetary policy announce- while reading the monetary policy
tion rate decline. come down during March-April 2023 ments. statement on Thursday, said the cen-
India’s retail inflation was above to 4.7 per cent in April, the lowest Benchmark Sensex and Nifty tral bank sees risks to these GDP fig-
RBI’s 6 per cent target for three con- since November 2021. were trading in a range of (-)0.1- ures as evenly balanced.
secutive quarters and had managed “Monetary policy tightening and (+)0.1 when writing this report. Bri- As per the provisional estimates
to fall back to the RBI’s comfort zone supply-side measures contributed to tania, Titan, Asian Paints, IndusInd released by the National Statistical
only in November 2022. Under the this process. The easing of inflation Bank, and L&T were the top five Office (NSO) recently, real GDP
flexible inflation targeting framework, was observed across food, fuel and gainers at the NSE, while HDFC Life, growth for 2022-23 stood at 7.2 per
the RBI is deemed to have failed in core (CPI excluding food and fuel) Tata Steel, ONGC, M&M, and Kotak cent, higher than the 7 per cent pro-
managing price rises if the CPI-based categories,” Das said. Mahindra Bank were the top losers. jected. The government expects an
inflation is outside the 2-6 per cent “A durable disinflation in the core Overall Indian stocks have been upward revision in the 2022-23 GDP
range for three quarters in a row. component would be critical for a buoyant over the past fortnight or numbers going ahead.
The RBI has lowered India’s in- sustained alignment of the headline so due to the continued inflow of Despite global headwinds and
flation projection for 2023-24 to 5.1 inflation with the target,” he said. foreign investments, relatively lower tighter domestic monetary policy
per cent against its April estimate Das added considering the re- crude oil prices, more than estimated tightening, various international
of 5.2 per cent. On a quarterly basis, cent rabi harvest remaining “largely GDP numbers, and a consistent de- agencies have forecasted India to
retail inflation (or Consumer Price immune” to adverse weather events, cline in inflation. be one of the fastest-growing econo-
Index) in Q1 is seen at 4.6 per cent, the near-term inflation outlook looks Coming to the GDP outlook, the mies in 2023-24, supported by robust
Q2 at 5.2 per cent, Q3 at 5.4 per cent, more favorable than at the time of RBI expects India’s 2023-24 GDP growth in private consumption and
and Q4 at 5.2 per cent, RBI Gover- the April policy meeting. growth at 6.5 per cent, with quarter sustained pick-up in private invest-
nor Shaktikanta Das said Thursday Indian stock indices traded near Q1 at 8.0 per cent, Q2 at 6.5 per cent, ment.

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