RBI pegs 7 per cent GDP growth; EMI rate cut chances look dim

The Reserve Bank of India has decided not to make any changes to policy rates during the meeting of its Monetary Policy Committee (MPC). Consequently, there is no likelihood of reduction in interest rates on loans in banks. Governor Shaktikanta Das announced the decisions of the MPC, stating that the RBI has decided to keep the repo rate stable at 6.5 percent. The reverse repo rate may remain at 6.25 percent, and the marginal standing facility (MSF) rate at 6.75 percent. Following this decision by the Reserve Bank, there is no possibility of a reduction in EMIs for loans.

The Reserve Bank has revised its growth forecast for the fiscal year 2023-24, projecting an increase of 0.5 percent. According to the new estimate, the GDP growth for the country during the fiscal year 2023-24 could be 7 percent. In the previous MPC meeting, the RBI had forecasted a growth rate of 6.5 percent. The Reserve Bank has increased the growth estimate for the current fiscal year’s third quarter from 6 percent to 6.5 percent and for the fourth quarter from 5.7 percent to 6 percent. For the next fiscal year 2024-25, the Reserve Bank has projected a growth rate of 6.7 percent in the first quarter, 6.5 percent in the second quarter, and 6.4 percent in the third quarter.

Regarding inflation, the Reserve Bank has not made any changes to its estimates. The RBI predicts that the average retail inflation rate could be 5.4 percent during the fiscal year 2023-24. The inflation rate is estimated to be 5.6 percent in the December quarter and 5.2 percent in the March quarter. For the first quarter of the next fiscal year 2024-25, the average inflation rate is projected to be 5.2 percent, 4 percent in the second quarter, and 4.7 percent in the third quarter.