Latest Situation of
INFLATION AND BANK RATE IN INDIA
As we know, 2024 is the LOK SABHA election year and on 5th April, 2024 was the last monetary policy brief by RBI to general public before
polling for elections will begin. So, it was expected that
there will be some relief in repo rate, bank rate, inflation rate, etc. but monetary policy
was unable to meet the market expectations to that level..
According to The Monetary Policy Repo Rate is 6.5% which is unchanged till last 7 times. While SDR, MSR, Bank rate and reverse repo rate is
6.25%, 6.75%, 6.75% and 3.35% respectively is also unchanged. Consumer Price Index [C.P.I.] in February 2024 stood at 5.1% lower than
5.7% in December 2023. GDP growth forecast for F.Y. 2024-25 is 7% which is also lower than the expectation of F.Y. 2023-24 which was 7.6%.
Even according to latest data of C.P.I. released on 13 May, 2024 for month of April is 4.83% which is higher than
expected which was 4% but it is still in inflation bracket which is 2-6%. Food inflation is also increase to 8.7%
in April 2024 whereas 8.52% in March 2024.
There are some positive outcomes also which can be derived from this monetary policy as retail inflation is 4.5% in this fiscal year which
is lower than 5.4% in F.Y. 2025. Net inflows by Foreign Portfolio Investors [F.P.I.] stood at $41.6 billion in 2023-24 which is the
second highest level of F.P.I inflows after 2014-15. Current Account deficit in 2024-25 to remain at a level i.e. both viable and eminently
manageable. C.P.I. inflation forecast for F.Y. 25 at 4.5%. 4.9%, 3.8%, 4.6% and 4.5% for quarter 1, 2, 3 and 4 respectively which is lower
than the current C.P.I. of 5.1%.The Indian Rupee [₹] remained largely range bound as compared to its emerging market peers as well as few
advanced economies during 2023-24. I.N.R. is most stable among major currencies in F.Y. 2024. Retail inflation also minuscule reduces to
4.83% in April from 4.85% in March.
Next monetary policy meeting scheduled during the June 5, 2024 to June 7, 2024.
Let see what new surprises it will bring.
