RBI maintains status quo, keeping repo rate unchanged at 6.5%; Also retains GDP growth forecast for fiscal 2023-2024 at 6.5%

RBI today announced its second bi-monthly policy of this fiscal and as expected the apex bank preferred to maintain status quo by keeping the key rates unchanged.

Announcing the policy review, RBI Governor Shaktikant Das said, Monetary Policy Committee decided to keep the policy repo rate unchanged at 6.5%, consequently, the Standing Deposit Facility (SDF rate) remains at 6.25% and the marginal standing facility and the bank rates stand at 6.75%.

The MPC also decided by a majority of five out of six members to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.

RBI Governor said that in India Consumer Price Inflation eased during March-April 2023 and moved into the tolerance band, declining from 6.7% in 2022-23.

Headline inflation, however, is still above the target as per the latest data and is expected to remain so according to our projections for 2023-24.

He said that as per our assessment, inflation will remain above 4% throughout 2023-24. Shaktikant Das said that taking into account all factors and assuming a normal monsoon, CPI headline inflation is projected at 5.1% for 2023-24.

The RBI MPC has kept the GDP growth rate at 6.5  percent. It said on a quarterly basis, the GDP growth rate stands at 8% in Q1FY 24, 6.5% in Q2 FY24, 6% in Q3FY24, and 5.7% in Q4 FY24.

RBI Governor Shaktikanta Das also announced that banks can now issue RuPay pre-paid forex cards. With this, the RBI also announced to expand the scope of an e-rupee voucher. To let this happen, non-bank companies could issue such instruments independently.

RBI governor also spoke about the withdrawal of Rs. 2000/- note. He said, since the third week of May, the decline in currency in circulation and pick up in govt spending have expanded system liquidity. This has got further augmented due to the RBI's market operations and the deposit of Rs 2000 banknotes in the banks.

Reserve Bank Governor Shaktikanta Das has said that, citizens have deposited or exchanged around 50 percent currency notes of 2000 rupee denominations. He said, there were around 3.62 lakh crore 2 thousand notes in circulation.

Out of which 1.8 lakh crore have been deposited or exchanged by the customers. RBI Governor said, about 85 percent of the amount deposited in the bank account is in line with expectation. He said that there is no rush in banks to deposit or exchange the notes. But he appeals to citizens not to wait till the last day to exchange the 2000 Rupee notes.

On the issue of 2000 Rupee notes in the custody of NRI’s or persons visiting abroad, he said RBI is sensitive on this issue. He also clarified that there are no plans to launch notes of new denominations.

On the issue of CBDC (Central Bank Digital Currency) Deputy Governor Rabi Shankar said, No specific date is decided for the public launch of CBDC. Under pilot project bank is expected test it with 1 million customers by the end of June. Now bank is testing its QR code’s interoperability with UPI.

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