India’s central bank left the key interest rates unchanged at its meeting on Friday, June 7.
The decision means the repo rate, at which the RBI lends short-term funds to banks, will continue at 6.5 percent.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), in a majority decision, opted for status quo interest rates, citing continued risks on the inflation front.
The rate-setting panel, which has kept the rates on hold for over a year now, said it wants to see signs of retail inflation easing to a sustainable level before tweaking the rates.
RBI Governor Shaktikanta Das, while announcing the decision, said the MPC decided to keep key rates unchanged by a 4:2 majority.
The last time RBI hiked its interest rate was in February 2023.
Inflation in India has been easing but not to the central bank’s desired levels yet.
India’s retail inflation stayed largely unchanged at 4.83 percent in April against a 10-month low of 4.85 percent in March.
As per the RBI’s own estimate in the April policy review, inflation is likely to continue above 4 percent throughout this fiscal year, except for a likely blip in the second quarter.
Economists believe if the monsoon fails to be normal as predicted and the impact of heatwaves reflects on food prices, the RBI may face fresh challenges on inflation management.
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