RBI MPC Meeting 7 June 2024: Repo rate remain unchanged, GDP projection 7.2 per cent

Presenting the second monetary policy statement of FY25, RBI Governor Shaktikanta Das about the Central Bank’s position on the economy said “Remains vigil on any upside risk inflation, especially food inflation. Economic growth is holding firm.”

The RBI’s monetary policy committee on June 7 decided to keep the repo rate unchanged for the eighth time in a row, at 6.5 per cent. GDP is projected to 7.2 per cent as against 7 per cent earlier. However, it projects CPI inflation for 2024-25 at 4.5 per cent, the same as earlier. The monetary policy stance continues to be ‘withdrawal of accommodation. The decision has been taken with a 4:2 majority.

The current reserve ratios and policy rates which remain unchanged are as under.

CRR (Cash Reserve Ratio) (I-CRR) of 10 per cent on the increase in NDTL From August 2023.	4.50%
SLR (Statutory Liquidity Ratio)	18.00 %
Repo Rate	6.50%
Standing Deposit facility (SDF)*	6.25%
Reverse Repo Rate	3.35%
Bank Rate	6.75%
MSF Rate (Marginal Standing Facility Rate)	6.75%

*SDF is the new floor for policy rates introduced by RBI in April 2022, as a mechanism to curb inflation by absorbing liquidity. The SDF rate is applied for which banks park their excess funds with the RBI without any collateral. However, the earlier system of reverse repo rate will remain as part of RBI’s toolkit and its operation will be at the discretion of the RBI for purposes specified from time to time, according to RBI’s announcement. This move of RBI makes the reverse repo rate redundant for now.

Surendra Naik