The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the monetary policy on Friday.

What Happened: The RBI maintained its benchmark repo rate unchanged at 6.5% and continued with the policy approach of "withdrawal of accommodation". The standing deposit facility (SDF) rate stays unchanged at 6.25%, while both the marginal standing facility (MSF) rate and the bank rate remain at 6.75%, Das said in his monetary policy speech.

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Growth Projections: The Indian central bank expects real gross domestic product (GDP) to grow by 7.2% in 2024-2025. Heightened agricultural activity is expected to brighten rural consumption prospects, whereas a sustained buoyancy in the services sector will likely proliferate growth in urban areas, Das said.

The RBI also gave out its growth estimates for the first quarter of the next financial year, pegging real GDP growth at 7.2% in Q1 of 2025-2026.

Inflation Projections: Consumer price inflation (CPI) is expected to come in at 4.5% for 2024-2025. For the first quarter of 2025-26, the RBI sees it at 4.4%.

RBI has adjusted its CPI inflation forecast for Q2 FY25 to 4.4%, up from its previous estimate of 3.8%. 

“Inflation is moderating, but the progress is slow and uneven. India's inflation and growth trajectory is moving in a balanced manner, but it is crucial to remain vigilant to ensure that inflation aligns with the target,” the RBI governor said.

Das also touched upon the increased CPI at 5.1% for the month of July. He said this was on the back of a higher-than-expected food inflation. Going ahead, factors to keep an eye on include growth in milk prices and higher mobile tariffs, he added.

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