The governor of the RBI said the committee will continue to take policy action immediately
New Delhi:
The Reserve Bank of India (RBI) left its key lending rate unchanged at 6.5 percent today.
RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has unanimously decided to leave the policy repo rate unchanged.
Das announced the RBI’s bimonthly monetary policy and said monetary policy measures are yielding the desired results.
He said the commission will continue to take swift and appropriate policy action to keep inflation expectations firmly anchored.
Most analysts had expected the RBI to leave the repo rate unchanged this time as well. Excluding the pause in April, the RBI raised the repo rate by 250 basis points cumulatively since May 2022 to 6.5 percent
The unchanged repo rate means that bank lending and deposit rates are also likely to remain unchanged until the next monetary policy meeting, as the commercial banks mirror the RBI’s lending rates in consumer interest rates.
India’s central bank has lowered inflation expectations to 5.1 percent in FY24 from a previous estimate of 5.2 percent. Despite this slight decline, the governor stressed that headline inflation is above the RBI target of 4 percent and is expected to remain that way for the rest of the year.
“India’s economy and financial sector stand strong and resilient amid unprecedented global headwinds,” he said.
The RBI maintained its GDP growth forecast for fiscal year 2023-24 at 6.5 percent.
While optimistic about the outlook for India’s economy, the RBI governor also identified several risks. Mr. Das said weak foreign demand, global market volatility, geopolitical tensions due to the war and El Nino pose risks to the economy’s growth in FY24.
Mr. Das said RBI will remain nimble in its liquidity management while ensuring sufficient resources for productive demands of the economy.