Relief for home buyers, RBI holds interest rate
Sandeep Dikshit
New Delhi, April 6
The Reserve Bank of India (RBI) on Thursday kept the repo rate (basic interest rate) unchanged at 6.5 per cent on expectations of lower inflation in the coming months due to past six successive rate hikes since May 2022. The move spares home buyers and those saddled with EMIs from the burden of another hike in their instalments.
Projects 6.5% growth
- Pause in rates, not a pivot, says RBI chief
- Benchmark lending rate unchanged at 6.50%
- RBI projects 6.5% GDP growth for 2023-24
- Inflation to be 5.2% in 2023-24
- Milk prices to remain elevated in summer
The RBI expects the real GDP for 2023-24 to be 6.5 per cent. The current April to June period will deliver the fastest growth of 7.8 per cent followed by 6.2 per cent, 6.1 per cent and 5.9 per cent in the next three quarters of 2023-24.
War against inflation on
Our job is not yet finished… war against inflation has to continue till we see a durable decline closer to the target. —S Das, RBI Governor
This projection is slightly higher than the World Bank’s latest expectations of 6.3 per cent GDP growth and the Asian Development Bank’s (ADB) forecast of 6.4 per cent. Terming the international situation dynamic and fast evolving, RBI chief Shaktikanta Das warned that volatility in external markets would be a major risk factor for the health of the economy as well as the stability of the rupee. “We are living in volatile times. The sudden announcement of output cut by OPEC and the jump in crude prices is another evidence of this volatility,” he said while announcing the decision of the Monetary Policy Committee, which met for three days from April 3, the first time this fiscal.
The RBI chief said any further interest rate hike had been held back on expectations of a modest inflation rate due to low prices in the Indian crude basket and a decent monsoon. Despite the elevated inflation seen in January and February due to a sharp turnaround in food inflation, Das said the RBI expected the inflation rate to moderate to 5.2 per cent. The rate would be evenly spread in all quarters with 5.1 per cent projection in the April to June quarter. It will be 5.4 per cent, 5.4 per cent and 5.2 per cent in the next three quarters.
“With unyielding core inflation, we remain vigilant in our pursuit of price stability, which is the best guarantee of sustained growth,” said Das.
“Though the record rabi harvest bodes well for easing of food prices and there is already evidence of correction in March, unseasonal rain needs to be watched,” said the RBI chief. Besides adverse climatic conditions, the other risk to future inflation was imported inflation which would need to be monitored, he said.
