Monetary Policy Committee committed to restoring unsettled balance between inflation, growth, says Shaktikanta Das in Post Monetary Policy Press Conference

The Reserve Bank of India (RBI) maintained the status quo on interest rate despite July-September quarter GDP growth falling to 7-quarter low of 5.4%, as against its own projection of 7%.

The Monetary Policy Committee is committed to restoring unsettled balance between inflation, growth; use policy instruments to achieve it, RBI Governor Shaktikanta Das said in the Post Monetary Policy Press Conference on Friday.

Inflation has to be reduced in interest of sustainable growth, Das added.

He exuded confidence that growth in the second half of the fiscal year would be much better than the April-September period even as the central bank significantly trimmed growth projection for FY25 to 6.6 per cent.

The downward revision in growth forecast follows the second quarter GDP print of 5.4 per cent, the lowest in last seven quarters. It was also below 6.7 per cent growth recorded in the first quarter (April-June).

India recorded a growth of 6 per cent in the first half (April-September period) of the current fiscal.

RBI lowered its growth projection for the current financial year to 6.6 per cent from 7.2 per cent projected earlier.

Going forward, Das said, the second half looks better than the first half of current fiscal year.

The better projection for the second half is based on healthy kharif crop production, higher reservoir levels and better rabi sowing.

The horse (inflation) has made a valiant effort to bolt out, our effort is to keep it on tight leash, the governor said, assuring that RBI will dissect inflation-growth conditions and act accordingly, H2 growth looks better than the first half.

He also announced that there was no scope for knee-jerk reactions, and that they need more evidence before taking any monetary policy action.

Earlier in the day, the Reserve Bank of India on Friday decided to keep the policy rate unchanged for the 11th time in a row but sharply lowered the GDP growth forecast to 6.6 per cent for the current fiscal, as against earlier projection of 7.2 per cent.

The Reserve Bank of India (RBI) maintained the status quo on interest rate despite July-September quarter GDP growth falling to 7-quarter low of 5.4 per cent, as against its own projection of 7 per cent.

The rate increase cycle was paused in April last year after six consecutive rate hikes, aggregating to 250 basis points since May 2022.

(With PTI inputs)