‘Monetary policy’ is a set of tools aiding a Nation’s Central Bank to control the overall supply of money, promote economic growth, and employ strategies such as changing bank reserve requirements, revising interest rates, and much more.
Mr. Shaktikanta Das, Governor of the Reserve Bank of India (RBI), held the Monetary Policy Committee (MPC) meeting today and announced the first monetary policy of FY25. Listed below are some of the key highlights one needs to know:
Some of the Policy-related measures are listed below:
● The Repo Rate is kept unchanged at 6.5 percent.
● GDP growth is forecasted at 7 percent for FY25. The quarterly projections are 7.1 percent for the first quarter; 6.9 percent for the second quarter; 7 percent for the third quarter and 7 percent for the last quarter.
● CPI inflation is forecasted at 4.5 percent for FY25. The quarterly projections are 4.9 percent for the first quarter; 3.8 percent for the second quarter; 4.6 percent for the third quarter and 4.5 percent for the last quarter.
Some of the Non-Policy measures are listed below:
● A scheme for trading of “Sovereign Green Bonds” (SGBs) at the International Financial Services Centre (IFSC) is to be announced.
● Introduction of a mobile application to have access to RBI’s Retail Direct Scheme and participate in the Govt securities (GSec) market.
● Enabling UPI for Cash Deposit Facility and its access for Prepaid Payment Instruments (PPIs) through third-party applications.
Here’s what Top Management from well-known Mutual Funds need to say on the RBI’s Monetary Policy:
“The monetary policy was quite uneventful, as expected. RBI maintained the status quo in rates, as well as its tone. While the inflation and growth projections did change, the difference was not meaningful. In such a scenario, we believe that the Indian bonds markets will be tracking global markets for a while.”, commented Mr. Sandeep Yadav, Head – Fixed Income, DSP Mutual Fund.
“As expected, the committee decided to keep the interest rates unchanged. However, it’s important to note that the timing of the rate cut is linked to the inflation rate reaching 4%. This creates some uncertainty about when the rate cut will happen. The market is concerned about a potential delay in the rate cut, which could cause it to remain range-bound in the near term.”, commented Mr. Deepak Ramaraju, Senior Fund Manager, Shriram AMC.
Written by Amit Madnani
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