RBI revises GDP growth for FY25 to 7.2 pc, inflation target remains at 4.5pc

The RBI has revised the GDP forecast for the current FY 24-25 to 7.2 per cent from 7 per cent earlier, and the CPI inflation is projected at 4.5 per cent.

Announcing the policy rates and GDP forecasts on Friday, RBI Governor Shaktikanta Das said, “The real GDP growth for the current financial year 2024-25 is projected at 7.2 per cent with Q1 at 7.3 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent, and Q4 at 7.2 per cent. The risks are evenly balanced.”

On the Inflation the RBI Governor added that “Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5 per cent with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent and Q4 at 4.5 per cent, the risks are evenly balanced. The GDP growth projection, we have increased it from 7 per cent to 7.2 per cent and the inflation projection, the average for the year, we have retained it at 4.5 per cent as it was in the last MPC meeting.

Das reiterated the MPC’s commitment to withdrawing accommodation gradually to ensure that inflation aligns with the targeted range while supporting economic growth.

“Monetary policy must continue to remain disinflationary and be resolute in its commitment to aligning inflation to the target of 4 per cent on a durable basis sustain price stability outset strong foundation,” the RBI Governor said.

The decision to keep the Repo Rate unchanged signals the RBI’s cautious approach towards balancing the objectives of controlling inflation and supporting economic recovery.

The food inflation is still above the normal limit and continuously posing challenge to the deflation process of RBI.

The RBI in its Monetary Policy Committee (MPC) has decided to keep the policy repo rate unchanged at 6.5 per cent as retail inflation continues to be above its target of 4 per cent.

The MPC, in a majority decision with four out of six members in agreement, opted to keep the Repo Rate unchanged.

Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent, while the marginal standing facility (MSF) rate and the bank rate remain at 6.75 per cent.

Governor Das, in his post-policy press conference, emphasised the importance of a balanced approach towards monetary policy.