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BUSINESS EYE OCTOBER 13, 2023 | The Indian Eye 34

With eye on inflation,

Reserve Bank keeps the repo

rate unchanged

Headline inflation in India rose to 7.8 per cent in July due to a surge in prices of food items

like wheat, rice and vegetables, including tomatoes, to later fall to 6.8 per cent in August.
Inflation data for September is due in next few days

OUR BUREAU
New Delhi/Mumbai
s has been expected by the business and
trade, the monetary policy committee of the
AReserve Bank of India (RBI) in its October
review meeting decided to keep the policy repo
rate unchanged at 6.5 per cent, maintaining status
quo for the fourth straight occasion. The repo rate
is the rate of interest at which the RBI lends to
other banks.

At the same time, it retained the overall
2023-24 GDP growth and inflation fore-

cast unchanged. Retail inflation is project-
ed at 5.4 per cent for 2023-24, with Q2
(Jul-Sep) at 6.4 per cent, Q3 (Oct-Dec) at
5.6 per cent and Q4 (Jan-Mar) at 5.2 per Reserve Bank of India (RBI) Governor Shaktikanta Das addresses the press conference after

cent. For Q1 (2024-25 fiscal), it is project- monetary policy review meeting, in Mumbai on Friday (ANI)
ed at 5.2 per cent. and August -- held the repo rate unchanged at 6.5 prices over the near term looks probable,” said
per cent. The repo rate is the rate of interest at Subhrakant Panda, President, FICCI.
Coming to growth, RBI maintained real GDP which RBI lends to other banks. Barring the latest “In line with the Monetary Policy Commit-
growth for 2023-24 at 6.5 per cent with Q2 at 6.5 third straight pause, the RBI raised the repo rate tee’s observation on recurring food price shocks
per cent; Q3 at 6.0 per cent; and Q4 at 5.7 per cent. by 250 basis points cumulatively to 6.5 per cent impacting both the inflation trajectory and its
That said, the only thing about which the central since May 2022 in the fight against inflation. Rais- persistence, FICCI reiterates that de-risking food
bank showed utmost concern is the rising inflation ing interest rates is a monetary policy instrument supply chains from weather related disruptions
and its attached potential risk to growth outlook. that typically helps suppress demand in the econo- should be a priority. This calls for a comprehen-
The overall inflation outlook, RBI cautioned, my, thereby helping the inflation rate decline. sive roadmap and coordinated action at multiple
saying it is clouded by uncertainties from the fall Headline inflation in India rose to 7.8 per cent levels.”
in kharif sowing for key crops like pulses and oil- in July due to a surge in prices of food items like Ashwini Kumar, Head- Market Data, ICRA
seeds, low water at key reservoirs, and volatile wheat, rice and vegetables, including tomatoes, to Analytics, the wholly-owned subsidiary of ICRA,
global food and energy prices. later fall to 6.8 per cent in August. Inflation data said: “The Reserve Bank of India has maintained
RBI Governor Shaktikanta Das said the cen- for September is due in next few days. status quo on policy rates at the just concluded
tral bank is concerned and it has identified high A big number of analysts and experts and Monetary Policy Committee meeting as inflation
inflation as a major risk to macroeconomic stabili- economists reacted on the monetary policy out- persists above the targeted rate, uneven rainfall is
ty and sustainable growth. Accordingly, the mone- come. “The ability of RBI to remain steadfast and likely to affect agri supply ahead of the onset of
tary policy remains resolutely focused on aligning focused on pitching key growth deliverables bodes festive season. Globally, the US Fed persists with
inflation to the 4 per cent target on a durable basis. well even as global uncertainties pick pace out- its hawkish stance even as oil prices have retreat-
Also, the governor noted 5 out of the 6 MPC side,” said Dinesh Khara, Chairman, SBI. ed. The 10-year government bond yield is likely to
members are for remaining focused on “withdraw- “RBI has kept the Repo rate and overall stance rise as the central bank has said it will consider
al of accommodation” in monetary policy stance unchanged as was largely expected, emphasising Open Market Operations (OMO) sales to man-
so as to ensure the inflation progressively aligns on withdrawal of accommodation and supporting age liquidity in the system. ICRA Analytics fore-
with the target, while supporting growth. growth. Inflation needs to be closely monitored, sees the 10Y benchmark yield to trade between
RBI in its past three meetings - April, June, but it seems to have peaked and a correction in 7.25- 7.40 per cent in the near term.”

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