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RBI Monetary Policy Committee: Policy Rates Unchanged

Recently, the Reserve Bank of India's Monetary Policy Committee (MPC) has decided to keep the policy rates unchanged.

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

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