New-Delhi: The Reserve Bank of India (RBI) governor Shaktikanta Das announced that the Monetary Policy Commitee (MPC) decided to keep the policy repo rate unchanged at 6.5% for a ninth consecutive meeting.
Consequently, the standing deposit facility (SDF) rate remains at 6.25%, and the marginal standing facility (MSF) rate and the bank rate at 6.75%, says RBI Governor Shaktikanta Das.
The RBI on Thursday kept the key policy repo rate unchanged at 6.5 per cent as it continued to maintain a balance between accelerating economic growth and keeping inflation under control.
RBI Governor Shaktikanta Das said the Monetary Policy Committee has decided by a 4:2 majority to keep the repo rate unchanged as inflation has risen above 5 per cent and is still above the targeted level of 4 per cent.
RBI governor said, “Headline inflation after remaining steady in April-May, increased in June driven by food component which remains stubborn. In 3Q, we will have substantial advantage of base effect which will pull down headline inflation numbers.”
He said that inflation after having eased to 4.8 per cent in April and May has risen to 5.1 per cent in June on the back of “stubbornly” high food prices.
“Without price stability, growth cannot be sustained so we have decided to continue with the disinflationary stance,” Das explained.
However, the RBI Governor said that the country’s inflation rate is expected to come down in the third quarter of the current financial year. He also said that domestic growth is resilient, supported by steady urban consumption.
Das also said there “is a convergence” between the RBI monetary policy decision and market expectations. The RBI has decided to stick to the “withdrawal of accommodation” policy stance.
Monetary policy is considered to be “accommodative” when it aims to make more money available in the banking system to spur economic growth and create more jobs.
The RBI had last changed rates in February 2023, when the repo rate was hiked to 6.5 per cent.
The RBI raised rates by 2.5 per cent between May 2022 and February 2023 after which they have been kept on hold to support economic growth despite inflationary pressures in the past.
The repo rate is the interest rate at which the RBI gives short-term loans to banks to enable them to meet their liquidity requirements.