Governor Shaktikanta Das of the Reserve Bank of India (RBI) announced during the Monetary Policy Committee (MPC) outcome that the policy rate would remain unchanged at 6.5%. In his address, Das stated that domestic demand conditions continue to support growth, with resilient urban demand and a revival in rural demand. He highlighted that fixed investment by manufacturing companies expanded in the previous fiscal year, reversing the contraction observed in the previous year. Consumer and business outlook surveys also indicate continued optimism.
This marks the second time in a row that the central bank has opted for a pause in the rate hike. The RBI has maintained its growth projection at 6.5% for the fiscal year 2023-24, with expectations of 8% growth in Q1, 6.5% in Q2, 6% in Q3, and 5.7% in Q4. Governor Das noted that domestic demand conditions remain supportive of growth, particularly with the revival of rural demand. This decision by the MPC is the third monetary policy announcement in 2023.
Read the full speech of the governor

Governor Shaktikanta Das highlighted that the Indian economy and the financial sector have demonstrated strength and resilience amidst global headwinds and uncertainties. While the geopolitical conflict persists and global policy normalization remains incomplete, the pace of global economic activity is expected to decelerate due to elevated inflation, tight financial conditions, and geopolitical tensions. In India, consumer price inflation has eased, but it is still above the target, and vigilance on the evolving inflation outlook is crucial. On the other hand, real GDP growth in the previous fiscal year was stronger than anticipated, and domestic macroeconomic fundamentals continue to strengthen.
The MPC’s decision to keep the policy rate unchanged at 6.5% was based on the ongoing transmission of previous monetary policy actions and the need to assess their cumulative impact. While risks to near-term inflation have moderated somewhat, pressures are expected in the second half of the year, which will require attention. The governor emphasized the importance of anchoring inflation expectations and striving to achieve the target of 4.0% going forward.
Overall, the RBI’s focus remains on preserving price and financial stability while ensuring the flow of financial resources to productive sectors of the economy. The Indian economy is exhibiting resilience, and fiscal consolidation, stable banking system, and orderly domestic financial markets contribute to strengthening macroeconomic fundamentals.
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