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Below the Quote on RBI Monetaty Policy Committee announcement by Dr Manoranjan Sharma, Chief Economist at Infomerics Ratings

Medium-term global growth outlook is marred by “demographic shifts, climate change, geopolitical tensions and fragmentations, rising public debt and new technologies (e.g., artificial intelligence)”. The domestic scenario is characterised by resilient macro-economy and moderating inflation but uneven and slow disinflation.  In view of contextually significant “multiple challenges”, the inflation forecast for FY25 was retained at 4.5 % and the growth forecast at 7.2 % in FY25. 

This decision was entirely in line with our expectations and indeed those of most participants of the financial market. Playing with a straight bat, the MPC’s stance in the August Policy with 4:2 majority continued to be “withdrawal of accommodation” and the Repo Rate (last changed in February 2023) was kept unchanged for the ninth consecutive time to continue, as the Governor stressed “with the disinflationary stance of withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth”. This was justified because despite continuously declining core inflation, retail inflation breached the 5 % mark in June 2024 (five-month high of 5.08 % in June 2024) and persistently elevated food inflation causes concern, particularly to the vulnerable sections of society. Given the evolving situation the RBI did well to be in a wait and watch mode.

New customer-friendly efficient cheque clearing process would reduce the current clearance time from two working days to just a few hours and reduce settlement risk for all participants involved in the process. Public depository for registered entities is welcome.

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