�ेस �काशनी PRESS RELEASE
भारतीय �रज़वर् ब�क
RESERVE BANK OF INDIA
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June 07, 2024
Monetary Policy Statement, 2024-25
Resolution of the Monetary Policy Committee (MPC)
June 5 to 7, 2024
On the basis of an assessment of the current and evolving macroeconomic
situation, the Monetary Policy Committee (MPC) at its meeting today (June 7, 2024)
decided to:
• Keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 6.50 per cent.
Consequently, the standing deposit facility (SDF) rate remains unchanged at
6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75
per cent.
• The MPC also decided to remain focused on withdrawal of
accommodation to ensure that inflation progressively aligns to the target,
while supporting growth.
These decisions are in consonance with the objective of achieving the
medium-term target for consumer price index (CPI) inflation of 4 per cent within a
band of +/- 2 per cent, while supporting growth.
Assessment and Outlook
2. Global economic activity is rebalancing and is expected to grow at a stable
pace in 2024. Inflation has been moderating unevenly, with services inflation staying
elevated and slowing progress towards targets. Uncertainty on the pace and timing of
policy pivots by central banks is keeping financial markets volatile. Equity markets
have touched new highs in both advanced and emerging market economies. Non-
energy commodity prices have firmed up, while the US dollar and bond yields are
exhibiting two-way movement with spillovers to emerging market currencies. Gold
prices have surged to record highs on safe haven demand.
3. According to the provisional estimates released by the National Statistical
Office (NSO) on May 31, 2024, real gross domestic product (GDP) growth in
Q4:2023-24 stood at 7.8 per cent as against 8.6 per cent in Q3. Real GDP growth for
2023-24 was placed at 8.2 per cent. On the supply side, real gross value added
(GVA) rose by 6.3 per cent in Q4:2023-24. Real GVA recorded a growth of 7.2 per
cent in 2023-24.
4. Going forward, high frequency indicators of domestic activity are showing
resilience in 2024-25. The south-west monsoon is expected to be above normal,
which augurs well for agriculture and rural demand. Coupled with sustained
momentum in manufacturing and services activity, this should enable a revival in
private consumption. Investment activity is likely to remain on track, with high
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capacity utilisation, healthy balance sheets of banks and corporates, government’s
continued thrust on infrastructure spending, and optimism in business sentiments.
Improving world trade prospects could support external demand. Headwinds from
geopolitical tensions, volatility in international commodity prices, and geoeconomic
fragmentation, however, pose risks to the outlook. Taking all these factors into
consideration, real GDP growth for 2024-25 is projected at 7.2 per cent with Q1 at 7.3
per cent; Q2 at 7.2 per cent; Q3 at 7.3 per cent; and Q4 at 7.2 per cent (Chart 1). The
risks are evenly balanced.
5. Headline inflation has seen sequential moderation since February 2024, albeit
in a narrow range from 5.1 per cent in February to 4.8 per cent in April 2024. Food
inflation, however, remains elevated due to persistence of inflation pressures in
vegetables, pulses, cereals, and spices. Deflation in fuel prices deepened during
March-April, reflecting the cut in liquified petroleum gas (LPG) prices. Core (CPI
excluding food and fuel) inflation eased further to 3.2 per cent in April, the lowest in
the current CPI series, with core services inflation also falling to historic lows.
6. Looking ahead, overlapping shocks engendered by rising incidence of adverse
climate events impart considerable uncertainty to the food inflation trajectory. Market
arrivals of key rabi crops, particularly pulses and vegetables, need to be closely
monitored in view of the recent sharp upturn in prices. Normal monsoon, however,
could lead to softening of food inflation pressures over the course of the year.
Pressure from input costs have started to edge up and early results from enterprises
surveyed by the Reserve Bank expect selling prices to remain firm. Volatility in crude
oil prices and financial markets along with firming up of non-energy commodity prices
pose upside risks to inflation. Taking into account these factors, CPI inflation for
2024-25 is projected at 4.5 per cent with Q1 at 4.9 per cent; Q2 at 3.8 per cent; Q3 at
4.6 per cent; and Q4 at 4.5 per cent (Chart 2). The risks are evenly balanced.
7. The MPC noted that the domestic growth-inflation balance has moved
favourably since its last meeting in April 2024. Economic activity remains resilient
supported by domestic demand. Investment demand is gaining more ground and
private consumption is exhibiting signs of revival. Although headline inflation is
gradually easing, driven by softening in its core component, the path of disinflation is
interrupted by volatile and elevated food inflation due to adverse weather events.
Inflation is expected to temporarily fall below the target during Q2:2024-25 due to
favourable base effect, before reversing subsequently. For the final descent of
inflation to the target and its anchoring, monetary policy has to be watchful of
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spillovers from food price pressures to core inflation and inflation expectations. The
MPC will remain resolute in its commitment to aligning inflation to the 4 per cent
target on a durable basis. Accordingly, the MPC decided to keep the policy repo rate
unchanged at 6.50 per cent in this meeting. The MPC reiterates the need to continue
with the disinflationary stance, until a durable alignment of the headline CPI inflation
with the target is achieved. Enduring price stability sets strong foundations for a
sustained period of high growth. Hence, the MPC also decided to remain focused on
withdrawal of accommodation to ensure that inflation progressively aligns to the
target, while supporting growth.
8. Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri
Shaktikanta Das voted to keep the policy repo rate unchanged at 6.50 per cent. Dr.
Ashima Goyal and Prof. Jayanth R. Varma voted to reduce the policy repo rate by 25
basis points.
9. Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri
Shaktikanta Das voted to remain focused on withdrawal of accommodation to ensure
that inflation progressively aligns to the target, while supporting growth. Dr. Ashima
Goyal and Prof. Jayanth R. Varma voted for a change in stance to neutral.
10. The minutes of the MPC’s meeting will be published on June 21, 2024.
11. The next meeting of the MPC is scheduled during August 6 to 8, 2024.
(Puneet Pancholy)
Press Release: 2024-2025/453 Chief General Manager
