Why in News?
Recently, the Reserve Bank of India‘s Monetary Policy Committee (MPC) has decided to keep the policy rates unchanged, taking into account the evolving macroeconomic situation.
- This is the second consecutive pause after a previous conservative rate hike of 250 basis points aimed at curbing inflation.
- The decision reflects a cautious approach to balance inflation management and support economic growth.
What is the Monetary Policy Committee?
- It is a statutory and institutionalized framework under the Reserve Bank of India Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.
- The Governor of RBI is ex-officio Chairman of the committee.
- The MPC determines the policy interest rate (repo rate) required to achieve the inflation target.
Inflation and Growth Projections:
CPI Inflation:
- Assuming a normal monsoon, CPI inflation is projected at 5.1% for 2023-24.
GDP Growth:
- Higher rabi crop production, anticipated normal monsoon, and robust services sector support private consumption and overall economic activity in the current year.
- Government’s emphasis on capital expenditure, moderating commodity prices, and credit growth are expected to nurture investment activity.
- Weak external demand, geopolitical tensions, and geoeconomic fragmentation pose risks to the growth outlook.
- Real GDP growth for 2023-24 projected at 6.5%.
Read also:- RBI Monetary Policy Committee Meeting June 2023
RBI Monetary Policy Committee: Policy Rates Unchanged
