The Reserve Bank of India has decided to maintain the key benchmark interest rate – repo rate – unchanged at 6.5 percent, with Governor Shaktikanta Das indicating his willingness to act should the circumstances warrant it.
Five of the six members of the MPC voted on Thursday to keep the emphasis on removing accommodation to keep inflation on track while concentrating on growth, according to RBI Governor Shaktikanta Das.
The central bank’s Monetary Policy Committee chose to take a break after raising interest rates six times in a row. Accordingly, RBI has decided that the standing deposit facility (SDF) will remain unchanged at 6.25 per cent and the marginal standing facility (MSF) and bank rates unchanged at 6.75 per cent.
Shaktikanta Das-headed Monetary Policy Committee (MPC) conducted its three-day meeting on April 3, April 5 and April 6 amid the rate hiking spree that started in May last year to check inflation.
At the last MPC meeting of the RBI in early February, it decided to raise the repo rate by 25 basis points to 6.5 per cent to manage inflation. So far, RBI raised the repo rate, the rate at which it lends to banks, by 250 basis points cumulatively since May 2022.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
Inflation had been staying above the RBI’s tolerance limit of 6 per cent for two consecutive months since January. In February, India’s retail inflation stood at 6.44 per cent, while in January, it was at 6.52 per cent.