Monetary Policy Meeting October

The Reserve Bank of India held its latest Monetary Policy Committee meeting from 7th to 9th October 2024.

Some of the important decisions taken at the meeting are listed below:

1. Policy Repo Rate remains unchanged at 6.5% for the 10th consecutive time since Feb 2023.

2. Policy stance changed from “Withdrawal of Accommodation” to “Neutral” due to well poised balance between growth and inflation.

3. Real GDP grew by 6.7% in Q1 FY25 led by revival in private consumption and improvement in investment.

4. GDP growth forecast for Q2FY25 at 7%, Q3FY25 at 7.4%, Q4FY25 at 7.4% and for FY25 at 7.2%

5. Inflation projection for FY25 retained at 4.5%.

6. PMI level is at 56.5% for manufacturing and 57% for services, which is the highest in the world.

7. Micro, Small and Medium Enterprises (MSMEs) will now be able to prepay loans without paying the foreclosure penalty. Earlier this facility was available only to loans availed by individual borrowers for non-business purposes.  

8. RBI sets specific timelines for gold loan companies to address and rectify the deficiencies identified in the operations of such companies.

Excerpts from the statement issued by Mr. Shaktikanta Das, Governor, Reserve Bank of India:

 “The share of investment in GDP reached its highest level since 2012-13. High frequency indicators available so far suggest that domestic economic activity continues to be steady.”

” Unexpected weather events and worsening geo-political conflicts constitute major upside risks to inflation. International crude oil prices have become volatile in Oct. The recent uptick in food and metal prices, as seen in the Food and Agricultural Organization (FAO) and the World Bank price indices for Sept, if sustained, can add to the upside risks.”