RBI keeps key interest rates unchanged remains focused on tackling inflation and ensure strong growth

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the central bank’s Monetary Policy Committee (MPC) has decided to keep the key repo rate steady at 6.5 percent. The decision is broadly in line with what economists had expected.

The decision to maintain the key repo rate at 6.5 percent marks the fifth instance when the 6-member Monetary Policy Committee (MPC) has opted to keep the interest rates unchanged.

“After a detailed assessment of the evolving macroeconomic financial developments and the outlook, the Monetary Policy Committee decided unanimously to keep the policy repo rate unchanged at 6.5 per cent,” Shaktikanta Das said.

“Consequently, the standing deposit facility rate remains at 6.25 per cent and the marginal standing facility and the bank rate remains at 6.5 per cent,” he added.

Das added that 5 out of the 6 MPC members decided to keep the focus on “Withdrawal of Accommodation” to ensure that inflation progressively aligns with the target (of 4 per cent) while supporting growth.

The RBI Governor highlighted that easing inflation across all components of retail inflation is one of the reasons behind the MPC’s decision to keep the repo rate unchanged. “There has been broad-based easing in core inflation, which is indicative of successful disinflation through monetary policy actions,” he said.

He, however, highlighted that the near-term inflation outlook is “masked” by risks to food inflation, which may lead to an uptick in November and December. “This needs to be watched for second-round effects, if any,” he added.

Governor Das also highlighted that the country’s domestic activity is “holding up well”, as reflected in the GDP growth for the second quarter of the ongoing financial year.

“Against this backdrop, the MPC decided to keep the policy repo rate unchanged at 6.5 per cent, but remain highly alert and prepared to undertake appropriate policy actions, as warranted,” Das said.

Published By:

Devika Bhattacharya

Published On:

Dec 8, 2023

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