Global economic outlook exhibits steady though uneven expansion: RBI Governor

Global economic outlook exhibits steady though uneven expansion, the RBI governor stated while keeping benchmark policy rates unchanged for the eighth consecutive review since February 2023. Manufacturing is indicating slowdown, while services activity is holding up. Notwithstanding sticky services prices, inflation is receding grudgingly across major economies. With varying outlook for growth and inflation across countries, monetary policy is showing signs of divergence across jurisdictions. Several central banks are cautiously moving towards policy pivots through forward guidance and rate cuts; at the same time, there has been tightening by a few central banks. Global financial markets are exhibiting volatility. Bond yields and the dollar index have softened since the last meeting.

The Monetary Policy Committee (MPC) met on 6th, 7th and 8th August 2024. After a detailed assessment of the evolving macroeconomic and financial conditions and the outlook, it decided by a 4 to 2 majority to keep the policy repo rate unchanged at 6.50 per cent. Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. The MPC also decided by a majority of 4 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

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