• The Reserve Bank of India (RBI) projects retail inflation for FY25 at 4.5%, anticipating a healthy monsoon and sound supply conditions.
• Food inflation is expected to decrease later in the year, stabilizing food prices and easing inflationary pressures.
• The RBI has kept the repo rate unchanged at 6.5% for the tenth consecutive time, aiming to balance controlling inflation with fostering economic growth.
• The UPI Lite wallet limit has been increased from Rs 2,000 to Rs 5,000, a move expected to boost digital transactions and promote a cashless economy.

In a recent announcement, Reserve Bank of India (RBI) Governor Shaktikanta Das projected the retail inflation for the current fiscal year (FY25) at 4.5 percent. This projection is based on the anticipation of a healthy monsoon and sound supply conditions. The announcement was made during a Monetary Policy Committee (MPC) meeting, a platform where key decisions regarding the country's monetary policy are discussed and implemented.

The Governor further stated that food inflation is likely to decrease later in the year, supported by a solid stock of essential commodities. This is expected to stabilize food prices and ease inflationary pressures in the economy. The RBI's Monetary Policy Committee (MPC) has projected the Consumer Price Index (CPI) inflation for FY25 at 4.5 percent, with quarterly estimates of 4.1 percent for Q2, 4.8 percent for Q3, and 4.2 percent for Q4.

The Governor's statement on food inflation indicates a positive outlook for the agricultural sector. Food inflation could see some easing later in this fiscal on the back of strong kharif sowing, adequate buffers, and good soil conditions, said Das. This is expected to have a significant impact on the economy, considering the pivotal role agriculture plays in India's economic growth and food security.

RBI's Stance on Inflation and Growth

However, the Governor also cautioned about the potential risks. Retail inflation in September is likely to see a jump due to an unfavorable base, pick up in food price momentum. The Inflation horse has been brought to the stable within the tolerance band. We have to be careful about opening the gate, he warned.

In addition to inflation, the Governor also touched upon the macroeconomic parameters of growth. He stated that these parameters are well balanced, with headline inflation on a downward trajectory, albeit at a slow and uneven pace. This is a crucial observation as it indicates the RBI's commitment to maintaining a balance between growth and inflation.

The RBI's decision to keep the repo rate unchanged at 6.5% for the tenth consecutive time is significant. This decision is expected to support continued stability in the housing market and foster a positive outlook for the Indian stock market. By maintaining the interest rate, the RBI aims to balance controlling inflation with fostering economic growth.

Impact on Housing Market and Digital Transactions

The RBI's decision is also expected to impact the housing market positively. Experts predict steady growth in transactions for mid-range and luxury residential properties, while the affordable and low-income housing segments, which are more sensitive to interest rate changes, will likely see a more cautious approach.

The RBI's decision to keep the repo rate unchanged also means that home loan interest rates and equated monthly installments (EMIs) will remain stable for borrowers, offering consistency in financial planning. This is particularly important for the real estate sector, which is sensitive to interest rate changes.

In another significant announcement, the RBI Governor stated that the UPI Lite wallet limit has been increased from Rs 2,000 to Rs 5,000. This move is expected to boost digital transactions in the country, thereby promoting a cashless economy.