RBI revises GDP growth forecast for FY25 to 7.2 per cent, retains inflation target at 4.5 per cent

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

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

Das reiterated the Monetary Policy Committee's commitment to gradually withdraw accommodative measures to ensure that inflation remains within the target range while supporting economic growth.

The RBI Governor said, “Monetary policy should remain disinflationary and remain steadfast in its commitment to keeping inflation within the target range of 4 per cent on a durable basis and maintaining price stability on a solid basis.”

The decision to keep the repo rate unchanged signals RBI's cautious approach towards maintaining a balance between the objectives of controlling inflation and supporting economic recovery.

Food inflation is still above normal levels and remains a challenge for RBI's disinflation process.

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 remains above its target of 4 per cent.

The MPC took a majority decision, with four out of six members agreeing to keep the repo rate unchanged.

As a result, 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 stressed the importance of a balanced approach to monetary policy in the post-policy press conference.