Important Highlights of RBI Monetary Policy 2024

Important Highlights of RBI Monetary Policy 2024

The Reserve Bank of India has concluded the first monetary policy of the financial year 2024-25 started from 3rd April to 5th April. The Reserve Bank of India maintained its view towards the benchmark interest rates and remained them unchanged for the seventh consecutive time. In today’s article we are going to cover some important highlights of the monetary policy.

Important Highlights:

• The monetary policy meeting decided to keep the repo rate unchanged at 6.5 percent for the seventh consecutive time.
• The RBI decided to maintain the policy stance of “withdrawal of accommodation”.
• The RBI also predicted the GDP growth rate for FY25 at 7 percent including quarterly predictions of GDP growth rate such as Q1-7.1%, Q2-6.9%,Q3-7% and Q4- 7%.
• RBI has forecasted CPI inflation rate at 4.5% for FY25 with quarterly forecasts such as Q1-4.9%,Q2- 3.8%,Q3-4.6% and Q4-4.5%.
• RBI also announced Sovereign Green Bonds trading scheme at IFSC.
• RBI has also confirmed the release of draft Circular for LCR frameworks for banks shortly.
• RBI introduced a mobile application for the access to RBI’s retail direct scheme for the participation of the government security market.
• RBI has also enabled UPI for Cash Deposit Facility.
• RBI also decided to distribute the CBDCs by non-bank payment system operators.
• RBI also enabled the UPI access for prepaid payment instruments by third party applications.

What is withdrawal of accommodation?

Withdrawal of accommodation means the Reserve Bank of India is going to reduce the money supply to tighten the inflation in the market.

Benchmark interest rates:

Benchmark interest rates after the Monetary Policy Committee meeting:

Policy repo rate: 6.5%

Reverse repo rate: 3.35%

standing deposit facility (SDF) : 6.25%

marginal standing facility (MSF) : 6.75%

Bank rate: 6.75%

Conclusion:

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is responsible for making decisions regarding monetary policy, including setting key interest rates like the repo rate and reverse repo rate. The committee was established in 2016 to ensure transparency and accountability in the formulation and conduct of monetary policy in India.

Important Questions:

• Describe the key Highlights of the first monetary policy of FY25.
• Describe the framework for monetary policy committee of RBI.

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