RBI Monetary Policy: Key Highlights

The Reserve Bank of India (RBI) plays a crucial role in shaping the Indian economy. One of its most powerful tools is the repo rate—the rate at which the RBI lends to commercial banks. Any change in this benchmark ripples across the entire financial system, influencing loans, EMIs, and even investment returns.

In February, the RBI raised the repo rate by 25 basis points to 6.50%, a move designed to tackle inflation without stalling growth. The rate has remained steady since June 2024. For everyday investors, this highlights the importance of balancing growth-oriented investments with secure options like Fixed Deposits (FDs).

With a Bajaj Finance FD, you can earn up to 7.30% p.a., making it a reliable way to grow your money while RBI’s policies continue to evolve. Open FD.

• RBI raised the repo rate to 6.50% to control inflationary pressures; it remained at 6.5% as of June 2024.
• Gradual removal of accommodative stance signals RBI focusing on inflation management.
• Projected 6.5% GDP growth for FY 23-24 exceeded, driven by rising consumption and exports.
• External factors like global commodity prices and weather may still impact the efficacy of RB measures.

The RBI aims to maintain inflation at 4%, with a permissible margin of 2%. Rising food and energy prices have pushed inflation higher, forcing the central bank to withdraw its accommodative stance—where rates were kept low to boost growth.

By raising the repo rate, the RBI is attempting to rein in prices and prevent further inflation shocks. For households, this means higher loan EMIs and borrowing costs, but also an opportunity to benefit from better fixed-income returns.

If you are concerned about inflation eating into your savings, locking funds in an FD ensures steady, inflation-resistant growth. Check eligibility.

At 6.50%, the repo rate reflects RBI’s priority of stability. Higher borrowing costs make loans more expensive for banks, businesses, and individuals, slowing demand and easing inflation.

The Monetary Policy Committee (MPC) voted 5:1 in favour of this increase, underlining the urgency to keep inflation in check. Still, RBI has been cautious not to stifle growth, maintaining a balance between stability and expansion.

For savers, this environment is favourable. Banks pass on higher rates to depositors, and options like Bajaj Finance FD let you lock in attractive rates for tenures from 12 to 60 months. Check rates.

Despite inflationary challenges, India’s growth story remains strong. The RBI initially projected 6.5% GDP growth for FY24, but actual growth crossed 8.2%—driven by consumption, exports, and robust industrial activity.

With rural and urban demand expected to rise further, the RBI remains optimistic. For individuals, however, it is wise to diversify between growth-oriented instruments and guaranteed ones like FDs.

Global commodity prices, supply chain disruptions, and unpredictable weather still pose risks to inflation. Domestically, factors like petroleum prices and food supply remain sensitive.

The RBI’s cautious approach—gradually phasing out its accommodative stance while holding rates steady—shows it is prepared to tackle these uncertainties.

Investors, too, can adopt this balanced strategy. While exploring growth avenues, allocating a portion of savings to AAA-rated Bajaj Finance FDs ensures safety, liquidity, and consistent income. Open FD account now, with as low as Rs. 15,000.

The RBI’s monetary policy continues to walk the fine line between curbing inflation and sustaining growth. By holding the repo rate at 6.50%, it signals determination to safeguard stability while nurturing India’s growth trajectory.

For individuals, this is the right time to rethink saving strategies. As borrowing costs rise and inflation lingers, Fixed Deposits stand out as a reliable choice to preserve and grow your money. With Bajaj Finance FD, you not only get assured returns up to 7.30% p.a. but also the peace of mind that comes with the highest safety ratings (AAA/Stable by CRISIL and ICRA). Book an FD!