RBI keeps repo rate unchanged at 6.5%
Sticks to hope even as more countries enter recession and gold prices hit historical highs
Will India remain unscathed? For how long?
The Reserve Bank of India has maintained its repo rate at 6.5%, defying views that it is time for caution amid a fragile global economy.
The decision came after a series of Monetary Policy Committee (MPC) meetings held this week (3, 4, 5 April), when it also celebrated its 90th anniversary.
The RBI said in a statement, “After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, it decided by a 5 to 1 majority to keep the policy repo rate unchanged at 6.50%.”
The standing deposit facility (SDF) rate will stay at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%.
However, the MPC also decided by a majority of five out of six members to remain focused on withdrawal of accommodation to ensure inflation progressively aligns to the target, while supporting growth.
The RBI believes inflation will decline to its targeted 4% on the back of robust growth prospects and decline in inflation in the recent few quarters. The only source of concern is food inflation.
On the global scale, the RBI highlighted that rising debt in advanced economies (AEs) could impact other economies, but India’s fiscal consolidation and faster GDP growth should help it remain safe.
According to the second advance estimates (SAE), India is likely to post real GDP growth of 7.6% for 2023-24, the third successive year of 7% or higher growth.
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