New Delhi: The RBI's monetary policy committee (MPC) has chosen to leave the repo rate steady, which will have no effect on home loan and other EMIs.
"The MPC unanimously decided to keep the repo rate unchanged at 6.5%," said RBI Governor Shaktikanta Das in a press conference on Friday.
The RBI's MPC has not changed the repo rate for the fourth time. The repo rate is the interest rate at which the RBI loans to other financial institutions.
"India is poised to be the world's new growth engine," RBI Governor Shaktikanta Das remarked.
The RBI also maintained its policy of "withdrawal of accommodation" in order to move inflation toward the MPC's objective while still supporting economic development.
The RBI kept the repo rate at 6.5 percent throughout its most recent three sessions in April, June, and August. The repo rate is the interest rate at which the RBI loans to other financial institutions.
In reaction to the Russia-Ukraine war, the Reserve Bank began a series of modest increases in the policy rate in May 2022, reaching 6.5 percent by February this year. Following then, the rate has remained steady in the previous three bimonthly monetary policy reviews.
Since May 2022, the MPC has raised rates by 250 basis points (bps) in an attempt to calm rising prices.
The government has charged the Reserve Bank with keeping the Consumer Price Index (CPI)-based retail inflation at 4 percent, with a 2 percent tolerance on each side. However, retail inflation in August was 6.83 percent, exceeding the RBI's permissible level.
Das stated that the MPC will continue to monitor inflation and is committed to keeping inflation at the target level.
Economists predict inflation to gradually fall toward the end of the year, but to remain above the RBI's target midpoint. Citigroup Inc economist Samiran Chakraborty predicts inflation would decrease to 5.3% in September, while "risks of inflationary pressure from cereals and pulses would be difficult to ignore," he says.
The monetary policy committee (MPC) is made up of three external members: Shashanka Bhide, Ashima Goyal, and Jayanth R. Varma, as well as three RBI officials: governor Shaktikanta Das, Rajiv Ranjan (executive director), and Michael Debabrata Patra (deputy governor).
(With inputs from agencies)
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