RBI Pegs Inflation at 4.8% for FY2025, Maintains Neutral Stance
The Reserve Bank of India (RBI) has projected a Consumer Price Index (CPI) inflation rate of 4.8% for the fiscal year 2025 (FY2025). This projection highlights the ongoing challenge of balancing inflation and economic growth. The announcement came during the Monetary Policy Committee's (MPC) latest meeting, where the repo rate remained unchanged at 6.5% for the eleventh consecutive time.
Governor Shaktikanta Das acknowledged rising risks to inflation, including weather disruptions, financial volatility, and geopolitical tensions. He emphasized the importance of maintaining price stability for sustained economic growth.
Despite expectations of resilient growth in the second half of the fiscal year, the RBI acknowledged a recent slowdown, particularly in urban demand. Inflation remains a concern, having exceeded the tolerance band in October. Food inflation is expected to persist, with relief likely only in the fourth quarter.
The MPC voted 4:2 to maintain its neutral stance, keeping the standing deposit facility (SDF) rate at 6.25% and the marginal standing facility (MSF) rate and bank rate at 6.75%.
The central bank emphasized the need to closely monitor evolving risks, particularly the potential impact of high inflation on GDP growth. While rural demand shows an upward trend and the services sector continues its strong performance, urban demand faces pressure from a high base effect.