RBI Monetary Policy Review: Key Takeaways

RBI Monetary Policy
RBI Monetary Policy

Interest Rates:

  • Repo rate remains unchanged at 6.5%
  • No change in stance of monetary policy (“withdrawal of accommodation”)
  • Interest rates on loans and deposits likely to remain unchanged
  • EMIs for borrowers linked to repo rate will not increase

Growth and Inflation:

  • Better-than-expected Q2 GDP growth at 7.6%
  • RBI revises FY2024 growth forecast upwards to 7% from 6.5%
  • Inflation forecast for FY2024 remains unchanged at 5.4%
  • Risks to inflation due to potential rise in food prices

Reasons for No Change in Repo Rate:

  • Need to manage both inflation and growth
  • Moderating headline inflation (4.87% in October 2023)
  • Concerns about rising food inflation
  • Need to maintain “Arjuna’s eye” on the 4% inflation target

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Liquidity Management:

  • RBI expected to maintain system liquidity at a slightly deficit level
  • Potential use of tools like OMO to manage liquidity

Other Key Points:

  • MPC decision on policy stance was a 5:1 majority vote
  • Higher government bond redemptions and potential for higher FPI flows expected
  • Uncertain weather conditions pose potential upside risks to inflation
  • Weak rural demand due to El Nino impact on agriculture


The RBI has maintained a cautious stance on monetary policy, balancing the need to control inflation with supporting economic growth. While the outlook for growth is positive, concerns about rising food prices remain. The RBI will likely continue to monitor inflation closely and adjust its policy stance as needed.

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