RBI Holds Rates Steady at 6.5%, Forecasts 7% GDP Growth for FY25

Key Points:

• RBI's Monetary Policy Committee (MPC) decided to maintain the repo rate, the key lending rate, at 6.5%. This marks the sixth consecutive time they've held rates steady.
• RBI expects India's Gross Domestic Product (GDP) to grow at 7% in the fiscal year 2024-25 (FY25). This is slightly lower than the 7.3% growth recorded in FY24.
• They forecast inflation to average 5.4% in FY24 and 4.5% in FY25. Their goal is to keep inflation around 4%.
• The MPC remains focused on "withdrawal of accommodation," meaning they may raise rates in the future to control inflation.
• This decision was largely expected by markets and analysts.

Additional Context:

• The RBI is balancing concerns about inflation with supporting economic growth.
• Global economic uncertainty and geopolitical tensions can impact India's growth and inflation.
• The RBI's next policy meeting is on April 3, 2024, where they may revisit interest rates based on updated data.