The Reserve Bank of India (RBI) unveiled its fourth bi-monthly monetary policy following three days of deliberation by the Monetary Policy Committee (MPC), led by the venerable RBI Governor Shaktikanta Das. This highly anticipated event had the financial world at its edge, and the verdict was clear.
The monetary policy’s primary objective remained steadfast – aligning inflation with the 4% target. RBI Governor Shaktikanta Das reiterated this goal, emphasizing the importance of price stability.
Here are the key excerpts from the MCP meeting:
1. Repo Rate Remains Unchanged
The central bank opted to maintain the status quo in a decision that caught the financial world’s attention. The repo rate, a pivotal interest rate, remained steady at 6.50%. The RBI’s stance was characterized as a ‘withdrawal of accommodation,’ signaling a cautious approach.
RBI Governor Shaktikanta Das stated, “The Monetary Policy Committee unanimously decided to keep the policy repo rate unchanged at 6.50%. Accordingly, the standing deposit facility (SDF) rate remains at 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate stay at 6.7 %.”
Additionally, Das noted, “A majority of five out of six members in the MPC also agreed to maintain a focus on the ‘withdrawal of accommodation’ to ensure a gradual alignment of inflation with the target, all while supporting growth.”
2. India’s projected growth
Shaktikanta Das also shared an optimistic view of India’s economic prospects, highlighting the nation’s focus on macro stability and sustainable growth. He expressed confidence that India was on the cusp of becoming a global growth engine, noting the transition from twin balance sheet stress to twin balance sheet advantage.
Governor Das remarked, “In the face of a challenging global landscape, the Indian economy continues to make significant progress, deriving its resilience from robust macroeconomic fundamentals and ample buffers.”
3. SDF and MSF rate remains the same
Notably, the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates remained unchanged at 6.25% and 6.75%, respectively, aligning with the MPC’s commitment to a gradual withdrawal of accommodation.
4. GDP Growth Forecast
The RBI’s GDP growth forecast for the fiscal year 2023-24 remained unaltered at 6.5%, with specific projections for each quarter. Similarly, the CPI inflation forecasts for various periods were adjusted with a vigilant eye on economic conditions.
| Time Period | GDP Growth Forecast (%) | CPI Inflation Forecast (%) |
| FY24 | 6.5% (unchanged) | 5.40% |
| Q2FY24 | 6.5% (unchanged) | 6.4% to 6.2% |
| Q3FY24 | 6.0% (unchanged) | 5.6% to 5.7% |
| Q4FY24 | 5.7% (unchanged) | 5.2% (unchanged) |
5. Liquidity management
Governor Das also addressed liquidity management, highlighting the possibility of G-Sec OMO sales. The timing and scale of such operations would depend on the prevailing liquidity conditions.
The RBI acknowledged the evolving liquidity landscape, citing banks’ greater usage of the Marginal Standing Facility and uneven liquidity distribution. Governor Das likened this situation to a “turning pitch,” suggesting adaptability in changing financial conditions.
6. Card-on-file tokenisation (CoFT)
Governor Das proposed a novel approach to card-on-file tokenization (CoFT) by suggesting the establishment of CoFT creation capabilities directly at the issuer bank level. He stated, “This step will elevate convenience for cardholders, allowing them to effortlessly generate tokens and associate them with their existing accounts across various e-commerce platforms.”
The RBI’s October monetary policy meeting emphasized the central bank’s commitment to maintaining stability amid evolving economic dynamics. With an eye on inflation control and economic growth, Governor Das and the MPC aimed to steer India toward a prosperous and sustainable future.
I’m Archana R. Chettiar, an experienced content creator with
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