RBI Monetary Policy meet August 2024 Repo Rate unchanged again says governor Shaktikanta Das

People waiting for loans to become cheaper and the burden of EMI to reduce have been disappointed once again. The Reserve Bank has not reduced the repo rate even in the record 9th meeting. Reserve Bank Governor Shaktikanta Das said on Thursday that the monetary policy committee of the central bank has once again decided to keep the repo rate stable.

RBI governor gave update after the meeting

RBI Governor Shaktikanta Das said that inflation still remains the biggest concern for the central bank. This is the reason why the Monetary Policy Committee once again decided to keep the repo rate stable at 6.5 percent. The Reserve Bank is in favor of waiting longer to reduce interest rates. The RBI’s August MPC meeting started on August 6 and concluded today. After that the RBI Governor informed about the decisions taken in the meeting. He said that 4 out of 6 members of the MPC favored keeping the repo rate stable. The next meeting of the MPC will be held in the month of October.

Last changed 18 months ago

This decision of RBI is going to disappoint those who have been expecting loans to become cheaper and the burden of EMI to ease for a long time. The Monetary Policy Committee of the Reserve Bank last changed the repo rate in February last year. That is, no change has been made in the policy interest rate for one and a half years. In the MPC meeting held in February 2023, RBI had increased the repo rate to 6.5 percent.

First meeting after presentation of full budget

This was the first meeting of the Reserve Bank after the presentation of the full budget for the financial year 2024-25. Finance Minister Nirmala Sitharaman presented the full budget on 23 July last month. This was the third meeting of the powerful Monetary Policy Committee of the Reserve Bank in the current financial year. The 6-member Monetary Policy Committee takes the decision on the policy interest rate i.e. repo rate. This was the 9th consecutive meeting of the MPC, in which it was decided to keep the repo rate stable.

This is how your EMI is linked to the repo rate

Repo rate is the interest rate on the basis of which banks get money from RBI. This means that repo rate is directly linked to the cost of funds for banks. When the repo rate is low, the cost for banks decreases and when the repo rate increases, funds become expensive for them. The interest rates of loans given by banks to the common people like home loan, personal loan, vehicle loan etc. are decided according to the repo rate. Due to the reduction in repo rate, all these loans become cheaper. Due to floating interest rate in the case of home loan, the effect of reduction in repo rate is also on the old loan and the burden of EMI is reduced. However, now people will have to wait more for that.

Retail inflation again crosses 5 percent

The Reserve Bank wants to bring the retail inflation rate in the country below 4 percent. The retail inflation rate came down below 5 percent in May and reached the lowest level in a year at 4.75 percent. However, due to the rise in the prices of food items, especially vegetables and pulses, the inflation rate once again crossed 5 percent in June and reached a 4-month high of 5.08 percent. Retail inflation figures for July are to be released next week.

Also read: RBI Governor said- India’s economic growth is on the path of growing at the rate of 8 percent