rbi
Published on 10 April 2025
RBI MPC August 2024: Key Policy Decisions and Economic Outlook
Introduction
Reserve Bank of India Monetary Policy Committee (MPC) had its meeting during August 6-8, 2024, opting to maintain the policy repo rate at 6.50%. It is the ninth consecutive meeting during which the rate has not been changed. The MPC continues to be dedicated to inflation control and also ensuring economic growth.
RBI MPC August 2024: Policy Rate Decisions
- Repo Rate: 6.50% (unchanged)
- Standing Deposit Facility (SDF): 6.25%
- Marginal Standing Facility (MSF) & Bank Rate: 6.75%
- Policy Stance: The MPC reaffirms the "withdrawal of accommodation" stance to both target inflation to the 4% target and spur economic growth.
Voting Pattern
- Four members voted to keep the current rate and stance.
- Dr. Ashima Goyal and Prof. Jayanth R. Varma voted for a 25 basis points (bps) reduction and a shift to a "neutral" policy stance.
Economic and Inflation Outlook
- GDP Growth Forecast for FY25: 7.2% (unchanged)
- CPI Inflation Forecast for FY25: 4.5% (unchanged)
Quarterly Inflation Forecasts
- Q2: 4.4%
- Q3: 4.7%
- Q4: 4.3%
Domestic Economy
Domestic economy is characterized by:
- Robust industry output
- Increasing private investment
- Lively services sector
- Rural demand stimulated by above-normal monsoon rains and improved kharif sowing (increasing 2.9% YoY)
- Record foreign exchange reserves of $675 billion
Drivers of Inflation
- Headline inflation went up to 5.1% in June 2024, primarily due to food prices; however, core inflation slowed down to 3.1%.
- The ongoing food inflation is a high-risk factor, whereas the fuel subgroup is experiencing deflation at the moment.
- The RBI anticipates short-term inflation above the target due to uncertainty in food prices as well as global commodity prices.
Recent Changes & What's New
October 2024 Policy Stance Update
In October 2024, the MPC became "neutral," meaning room to cut rates if inflation risks recede.
Banking Sector Guidance
The RBI has advised banks to tighten risk management practices, particularly on personal and top-up house loans, and keep leverage levels in check.
Liquidity Management
The RBI has reaffirmed its commitment to making available adequate liquidity and maintaining financial stability despite ongoing volatility in global markets.
Forward Guidance and Future Direction
Data-Driven Policy
The RBI will calibrate its policies in tandem with inflation and growth figures and remain vigilant of risks both domestic and international.
FAQs: RBI Monetary Policy August 2024
Q: Why did the RBI stick to status quo in repo rate? A: For purely precautionary reasons, with food inflation still in place and market volatility across the world, it has kept its focus to fight inflation in order to support growth.
Q: What are the main risks to the outlook? A: Main risks are potential shocks from food prices, global commodity price volatility, and other external sources.
Q: Is an immediate rate cut likely? A: The shift to a "neutral" stance in October 2024 indicates there is some chance of a rate cut if inflation risks come down.
Summary Table: RBI MPC August 2024 at a Glance
| Policy Rate | August 2024 Value | Stance | FY25 GDP Forecast | FY25 CPI Inflation |
|---|---|---|---|---|
| Repo Rate | 6.50% | Withdrawal of accommodation (Aug); Neutral (Oct) | 7.2% | 4.5% |
| Standing Deposit Facility (SDF) | 6.25% | |||
| Marginal Standing Facility (MSF) & Bank Rate | 6.75% |