Governor’s Statement: February 8, 2024

Summary:

The Reserve Bank of India's first monetary policy statement of 2024 highlights the country's robust economic growth and stability. The RBI aims to maintain a fine balance among price stability, financial stability, and external sector stability. The global economy presents a mixed picture, with rising inflation in some regions and soft landing in others. India's economy has performed well, with growth accelerating and inflation declining. The RBI has maintained a cautious stance, keeping the policy repo rate unchanged at 6.50% to ensure that inflation progressively aligns with the target of 4%. The monetary policy committee will continue to monitor inflation and growth dynamics to ensure that inflation expectations are well-anchored.

Growth is expected to remain strong, driven by improving physical infrastructure, digital technology, and ease of doing business. The services sector is expected to remain resilient, and investment cycle is gaining steam. Headline inflation has moderated to 5.4% in the current year (2023-24) and is projected to decline further to 4.5% in 2024-25.

The RBI is proactive in its liquidity management, injecting liquidity when needed to ease tightness in the system. The financial system remains resilient, with healthy balance sheets of banks and financial institutions. The exchange rate of the Indian rupee is market-determined and has remained stable, reflecting the strength and stability of the Indian economy.

Overall, the RBI's policy stance is focused on maintaining inflation targeting, ensuring financial stability, and promoting sustainable economic growth.