The Reserve Bank of India (RBI) has maintained the repo rate at 6.5% for the ninth consecutive time, as announced by Governor Shaktikanta Das during the Monetary Policy briefing on Thursday.
This marks 18 months of unchanged rates, with the central bank continuing its stance on the withdrawal of accommodation. The growth projection for the current financial year remains steady at 7.2%.
Governor Das raised concerns about the increasing disbursal of top-up home loans and urged lenders to take corrective measures, warning that a decline in deposits could lead to structural liquidity issues for banks.
Inflation is on a declining trajectory, Das noted, with a significant base effect expected to lower overall inflation in the third quarter. However, high food inflation in the first quarter of FY25 is slowing the disinflation process and affecting household inflation expectations. Household consumption is currently supporting a demand turnaround.
Das projected retail inflation at 4.5% for the current fiscal year, assuming a normal monsoon, and expressed optimism that improved agricultural activities would enhance rural consumption. The manufacturing sector is gaining strength due to increasing domestic demand, while the service sector remains buoyant.
The governor also noted that the rupee remained largely range-bound in August and emphasized that the country’s financial system is resilient, bolstered by broader macroeconomic stability.