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RBI Policy: Reserve Bank of India Keeps Interest Rates Unchanged to Tackle Inflation

The big news according to this new RBI Policy is that the interest rate, called the “repo rate,” will stay the same at 6.5%


Chennai, 10 August(City Times): The Reserve Bank of India (RBI) has decided to keep the main interest rate at 6.5%, showing its determination to control rising prices. At a recent meeting led by RBI Governor Shaktikanta Das, several important points about India’s economy were discussed, including predictions for growth, inflation, and how technology is changing payments. Let’s look at the main things we learned from the RBI’s latest announcement and (RBI Policy).

No Change in Interest Rate and Focus on Inflation:
The big news according to new RBI Policy is that the interest rate, called the “repo rate,” will stay the same at 6.5%. This is the third time in a row that they’re not changing it. But the important thing to know is that the RBI is getting ready to slowly make borrowing money a bit harder, so that prices don’t go up too fast.

Predictions for Growth and Prices:
The RBI thinks that India’s economy will grow by 6.5% this year. But they also say that prices might go up by 5.4%. That’s a bit more than before, mostly because things like tomatoes are becoming more expensive, and that can make everything cost more.

Mixed Movements in Indian Stock Market

After new RBI Policy the Indian stock market saw mixed movements as the Sensex and Nifty faced losses, while certain sectors like banking, automotive, and real estate initially showed some positive signs before also experiencing declines. This came after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announced its decision to maintain the current policy rates and stance, which was widely anticipated. RBI Governor Shaktikanta Das mentioned that the repo rate would remain unchanged at 6.50 percent, and the policy stance would also stay the same, indicating a cautious approach.

Response to RBI’s Move in the Market

Following this according to new RBI Policy, there was a decline of over 0.5% each in both the Sensex and Nifty indices. Sectors that are influenced by alterations in interest rates, such as Nifty Bank, Auto, and Realty, experienced fluctuations. Approximately at 11:30 am, the Sensex stood at 65,646 points, down by 0.53%, while the Nifty was trading at 19,533 points, reflecting a 0.51% decrease.

Key Economic Projections Highlighted

Governor Das also highlighted key economic projections. The Consumer Price Index (CPI) inflation forecast for the fiscal year 2023-24 was adjusted to 5.4 percent, with the second quarter (Q2) projected at 6.2 percent, third quarter (Q3) at 5.7 percent, and fourth quarter (Q4) at 5.2 percent. Additionally, the RBI predicted a notable increase in Q2 headline inflation due to higher vegetable prices.

Optimism Amid Inflation Concerns

Despite the inflation concerns, Governor Das expressed optimism about India’s economic growth. He emphasized that India holds the position of the world’s fifth-largest economy and contributes 15 percent to global economic expansion.

Projections for Economic Growth

Looking ahead, the new RBI Policy projected a real GDP growth rate of 6.5 percent for the fiscal year 2023-24, with growth rates of 8 percent for the first quarter (Q1), 6.5 percent for Q2, 6 percent for Q3, and 5.7 percent for Q4. Furthermore, the real GDP growth for the first quarter of fiscal year 2024-25 is expected to reach 6.6 percent.

Making Payments Easier and Clearer:
Something interesting is that the RBI wants to make it better to pay for things digitally. They want to use computers to help with payments, and they also want to let people use their phones to pay even when they’re not connected to the internet. They’re also thinking about letting us pay more money at once using our phones (RBI Policy)

Changing Borrowing Rates and Helping Borrowers:
When you borrow money, sometimes the interest rate changes. The RBI wants to make this process easier to understand. Also, if you borrowed money and the interest rate is too high, they want to let you change it to a lower rate or even pay back the loan faster.

Managing Money and Keeping Banks Safe:
RBI wants to make sure there’s not too much extra money in the banks. So, they’re asking the banks to keep a bit more money in their accounts for a while. This is because sometimes having too much money can cause problems. The RBI also said that banks in India are doing well and have a lot of money saved up. (RBI Policy)

Conclusion and What’s Next:
The RBI wants to stop prices from going up too much, so they’re being careful with the interest rate. They’re also trying to make it easier for us to pay for things using technology. India’s economy is facing some challenges, but the RBI is working to make sure everything stays stable and that people can manage their money without too much trouble.(RBI Policy)

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