RBI leaves repo rate unchanged at 6.5% for sixth straight time

RBI Repo Rate: The Monetary Policy Committee of the Reserve Bank of India (RBI) unanimously opted to maintain the policy repo rate at 6.5 percent, marking the sixth consecutive instance of status quo. 

The repo rate signifies the interest rate at which the RBI extends loans to other banks.

Deliberating the policy statement after a three-day review meeting, RBI Governor Shaktikanta Das attributed comfortable inflation and firm growth dynamics as the reasons behind maintaining the status quo the policy stance.

Das said inflation is moving closer to the target and growth is holding better than expected.

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Although retail inflation in India remains within the Reserve Bank of India's (RBI) comfort level of 2-6 percent, it exceeds the ideal scenario of 4 percent. As of December, it stood at 5.69 percent. 

Governor Das stated that the Monetary Policy Committee (MPC), with a majority vote of 5 out of 6 members, has chosen to prioritize the withdrawal of accommodation to gradually align inflation with the target, while also supporting growth.

The Indian economy grew 7.6 per cent during the July-September quarter of the current financial year 2023-24, remaining the fastest-growing major economy. India's GDP growth for the April-June quarter grew 7.8 per cent.
The three-day bi-monthly monetary policy committee (MPC) meeting of the RBI began on Tuesday. The RBI typically conducts six bimonthly meetings in a financial year, where it deliberates interest rates, money supply, inflation outlook, and various macroeconomic indicators.

The RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. 

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(With inputs from agencies) 

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