Reserve Bank of India Governor Shaktikanta Das announced that the Central Bank’s Monetary Policy Committee (MPC) has unanimously opted to maintain the key repo rate at 6.5 percent, considering the expectations of economists. Notably, this decision represents the fourth occasion on which the 6-member MPC has chosen to leave the key interest rates unchanged. 

Shaktikanta Das stated that following a detailed assessment of the evolving macroeconomic and financial development and the outlook, the Monetary Policy Committee unanimously decided to keep the policy repo rate unchanged at 6.5 percent. The standing deposit facility (SDF) rate remains at 6.5% and the marginal standing facility (MSF) and the bank rate are at 6.7 percent.

The RBI governor added that five out of six members of the MPC decided to remain focused on the withdrawal of accommodation to ascertain that the inflation progressively aligns with the target while supporting growth. Elaborating the MPC’s rationale behind the policy stance, Shaktikanta Das noted that the overall inflation outlook is clouded by the uncertainties from the fall in Kharif sowing for certain major crops like pulses and oil seeds, lower reservoir levels and volatile global food and energy prices. 

He continued that the MPC observed that the recurring incidents of large and overlapping food price shocks can impart generalisation and persistence to headline inflation. Taking into consideration the evolving inflation growth dynamics and the cumulative policy repo rate hike of 250 basis points, which is still working through the economy, the MPC decided to keep the policy repo rate unchanged at 6.5 per cent, Shaktikanta Das added.

He further mentioned that the Monetary Policy Committee remains highly alert to undertake timely policy measures, as may be necessary, in order to align inflation to the target and anchor inflation expectations. In addition, the central bank forecasted retail inflation at 5.4 percent for 2023-24.

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