RBI Monetary Policy: The RBI kept the repo rate unchanged at 6.5% with a 4:2 majority. (File)
New Delhi/Mumbai:
The Reserve Bank of India (RBI) has kept its key interest rate unchanged for the eleventh time in a row due to high inflation, but has sharply lowered its growth target for the current fiscal year.
The six-member Monetary Policy Committee (MPC) has decided by a majority of 4:2 to keep the repo rate unchanged at 6.5 percent, RBI Governor Shaktikanta Das announced this morning. An unchanged repo rate means that the interest rate on loans is also likely to remain unchanged.
The status quo on the repo rate came despite the growth rate falling to a seven-quarter low of 5.4 percent in the July-September quarter, ending well below its own projection of 7 percent.
This came as a disappointment to investors looking for a rate cut. The RBI halted the rate hike cycle in April 2023, after six consecutive rate hikes of 250 basis points since May 2022.
The MPC, which meets every two months, lowered the growth target for this fiscal year from 7.2 percent to 6.6%.
The inflation target has been increased from the previously predicted 4.5 percent to 4.8 percent. Inflation rose above the tolerance level of 6% in October, the RBI governor said, adding that food inflation will start to decline next quarter. Persistently high inflation is reducing consumers' purchasing power, he added.
The MPC, he said, believes that only with sustainable price stability can strong foundations for high growth be laid.
Mr Das said the global economy has shown unusual resilience in 2024. Pressure on the supply chain has eased in the past two months, he said, noting that rural demand is on an upward trend, while urban demand is showing some moderation on a high basis.
The RBI has also increased the interest rate ceiling on NRI deposits, with an aim to strengthen the rupee. To ensure that banks have more money available for lending, the cash reserve ratio (CRR) has been reduced from 4.5 per cent to 4 per cent, which would free up Rs 1.16 lakh crore to banks and improve their lending capacity.
The RBI has also announced a new technology – themulehunter.in – that it has developed to reduce digital fraud.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)