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

The decisions are in consonance with the central bank’s objective of achieving the medium-term consumer price index (CPI) inflation target of 4 per cent within a band of plus or minus 2 per cent.

Real gross domestic product (GDP) growth for fiscal 2024-25 is projected at 7 per cent with the first quarter (Q1) at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7 per cent; and Q4 at 7 per cent). The risks are evenly balanced, the MPC’s monetary policy statement said.

An expected normal south-west monsoon should support agricultural activity. Manufacturing is expected to maintain its momentum on the back of sustained profitability, it said.

“Private consumption should gain steam with further pick-up in rural activity and steady urban demand. A rise in discretionary spending expected by urban households, as per the Reserve Bank’s consumer survey, and improving income levels augur well for the strengthening of private consumption,” it noted.

The prospects of fixed investment are bright with business optimism, healthy corporate and bank balance sheets, robust government capital expenditure and signs of upturn in the private capital expenditure cycle, the statement said.

Headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions and extreme weather events, however, pose risks to the outlook.

Assuming a normal monsoon, CPI inflation for fiscal 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.

Fibre2Fashion News Desk (DS)