RBI To Keep The Repo Rate At 6.5%, Unchanged From Previous Rates
The monetary policy committee of the Reserve Bank of India (RBI) unanimously voted to maintain the repo rate at 6.5 percent.
The interest rate at which the RBI loans money to other banks is known as the repo rate.
The central bank may have decided to again pause the main interest rate due to the ongoing decrease in inflation, which is currently at an 18-month low.
The majority of observers had predicted that the RBI would hold the repo rate same.
Many nations, especially mature ones, have concerns about inflation, but India has done a good job of controlling its trajectory.
The repo rate had been halted by the RBI during its April meeting, the first in 2023–2024.
With the exception of the halt in April, the RBI increased the repo rate by a total of 250 basis points, or 6.5 percent, since May 2022 in an effort to combat inflation.
An weapon of monetary policy that normally works to reduce demand in the economy and lower inflation is raising interest rates.
Retail inflation in India exceeded the RBI's 6% objective for three consecutive quarters and only managed to return to the RBI's safe level in November 2022. If the CPI-based inflation is outside the 2–6% range for three consecutive quarters, the flexible inflation targeting framework considers the RBI to have failed in managing price increases.
Regarding the GDP projection, the RBI projects 6.5% GDP growth for India in 2023–2024, with Q1 GDP growth of 8%, Q2 GDP growth of 6.5%, Q3 GDP growth of 6%, and Q4 GDP growth of 5.7%. Shaktikanta Das, governor of the RBI, stated that the central bank views the risks associated with these GDP statistics as evenly balanced while reading the monetary policy statement on Thursday.