Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged for the 9th consecutive time at 6.5 per cent. The MPC decided by a majority of 4 out of 6 members to remain focused on "Withdrawal of Accommodation" stance.
RBI Monetary Policy: Governor Shaktikanta Das-led MPC maintains the status quo by keeping the repo rate unchanged at 6.5 per cent for the ninth consecutive time
Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged for the 9th consecutive time at 6.5 per cent. The MPC decided by a majority of 4 out of 6 members to remain focused on "Withdrawal of Accommodation" stance.
The central bank's MPC began its three-day meeting on August 6. The last time central bank raised interest rates was in February 2023.
Before that, in an off-cycle meeting in May 2022, the MPC increased the policy rate by 40 basis points. This was followed by a series of rate hikes over the next five meetings, culminating in a total increase of 250 basis points by February 2023. Since April last year, the RBI has paused further rate hikes.
"Headline inflation after remaining steady at 4.8 per cent increased to 5.2 per cent in June due to food inflation," RBI Governor Shaktikanta Das said.
While inflation continues to be a major concern, this years' Economic Survey recommended that the central bank should stop looking at food inflation when deciding interest rates. The government should explore giving coupons or direct cash transfer to poor to deal with higher food prices, the survey read.
However, Das said in its interest rate announcement that "food inflation has weight of 46 per cent on headline inflation" and therefore it cannot be ignored.
GDP Projections
The forecast for GDP growth in FY25 has been revised to 7.2 per cent. The quarterly projections for Q1 is at 7.3 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent and Q4 at 7.2 per cent.
For the first quarter of FY26, the central bank has projected GDP growth rate of 7.2 per cent