Reserve Bank of India (RBI) announced on Thursday its decision to maintain the status quo on lending rates by keeping the repo rate steady at 6.5 percent.
This is the third consecutive time the Reserve Bank of India pauses a rate hike.
Since May 2022, the central bank raised the repo rate by 250 basis points.
Explaining the rationale behind the decision, RBI Governor Shaktikanta Das said the cumulative rate hike of 250 basis points undertaken by the MPC [Monetary Policy Committee) is working its way into the economy.
He said the domestic economic activity is holding up well and is likely to retain its momentum, despite weak external demand.
“The MPC remains resolute in its commitment to aligning inflation to the 4 percent target and anchoring inflation expectations,” he added.
Meanwhile, the bank’s inflation forecast was revised upwards to 5.4 percent from 5.1 percent earlier on the back of rising vegetable, cereal and pulse prices.
The Reserve Bank of India’s monetary policy holds significance against the backdrop of the evolving economic landscape, both domestically and globally.
It will have a crucial impact on India’s economic recovery, inflation dynamics, and overall financial stability.
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