MPC keeps repo rate unchanged at 6.50%

The Reserve Bank of India revealed its bimonthly monetary policy on Thursday, keeping the repo rate unchanged at 6.50 percent. The RBI’s Monetary Policy Committee (MPC) unanimously agreed to maintain the repo rate at 6.50 percent, said governor Shaktikanta Das in announcing the first monetary policy statement of the fiscal year.

“The MPC also decided by a majority of five out of six members to remain focused on “withdrawal of accommodation” to ensure that inflation progressively aligns with the target while supporting growth, the RBI governor added.

The RBI governor said, “Amidst this volatility, the banking and non banking financial service sector in India remain healthy, and financial markets have evolved, in an orderly manner. Economic activity remains resilient, and real GDP growth is expected to have been 7 per cent in FY23.”

Das predicted that GDP would increase by 6.5 percent in the current fiscal year. Retail inflation is anticipated to fall to 5.2% in FY2023-24, he adds.

The RBI governor stated that the SDF would stay at 6.25 percent, and the marginal standing facility, i.e., the MSF rate, and the bank rate would remain at 6.75 percent.

Das emphasised that the move to pause the repo rate is only for this meeting. He stated that the MPC would not hesitate to take additional action as needed at future sessions.

The RBI’s MPC has raised the repo rate by 250 bps in the last 11 months, from May 2022. The repo rate is the key lending rate through which the RBI lends money to commercial banks against government securities.