RBI Monetary Policy Analysis

Monetary Policy Statement, 2023-24 Resolution of the MPC (Feb 6-8, 2024): Key Points

Policy Rates:

• Repo rate maintained at 6.5%, as expected by most economists.

• Accommodative stance remains unchanged at "withdrawal of accommodation".

Inflation & Growth:

• CPI inflation projected at 5.4% for 2023-24, revised slightly upwards from 5.3%.

• GDP growth forecast at 6.4% for 2023-24, unchanged from previous projection.

• Inflation for 2024-25 projected at 4.5%, assuming a normal monsoon.

Other Key Points:

• MPC emphasized commitment to achieving an inflation target of 4% within a band of +/- 2%.

• Tight liquidity stance to be maintained to ensure effective transmission of past rate hikes.

• Banks urged to communicate loan rates transparently, including all charges and fees.

All-around:

• The MPC adopted a wait-and-watch approach, keeping rates unchanged given the balanced growth and inflation outlook.

• Future rate actions will depend on evolving economic conditions and inflation trajectory.

Comparison of the Last 12 Monetary Policies in Excel

Here's an Excel table comparing the last 12 monetary policies with the February 2024 resolution:

Date	Stance	Repo Rate	Inflation Projection (FY)	GDP Growth Projection (FY)	Key Highlights
Feb 2024	Accommodative withdrawal	6.50%	5.40%	6.40%	Focus on inflation, tight liquidity, loan rate transparency
Dec 2023	Accommodative withdrawal	6.50%	5.30%	6.40%	Similar to Feb 2024, emphasis on growth revival
Oct 2023	Calibrated withdrawal	6.50%	5.10%	6.70%	Shift towards withdrawal of accommodation
Aug 2023	Withdrawal of accommodation	6.25% (25bps hike)	5.10%	7.20%	First rate hike in current cycle
Jul 2023	Accommodative withdrawal	6.25%	5.10%	7.20%	Similar to Aug 2023
Jun 2023	Calibrated withdrawal	6.25%	5.10%	7.20%	Gradual shift towards tightening
May 2023	Accommodative withdrawal	6.25%	5.10%	7.20%	Inflation concerns rising
Apr 2023	Accommodative withdrawal	6.25%	4.5-5.1%	7.2-7.8%	Balance between growth and inflation
Feb 2023	Accommodative stance	4%	4.5-5.1%	7.2-7.8%	Focus on supporting growth
Dec 2022	Accommodative stance	4%	4.5-5.3%	7.2-8.7%	Continued accommodative stance
Oct 2022	Accommodative stance	4%	4.5-5.3%	7.2-8.7%	Accommodative measures for various sectors
Aug 2022	Accommodative stance	4%	4.5-5.3%	7.2-8.7%	Last policy with accommodative stance