Ahead of the festive season, the Reserve Bank of India on Friday decided to keep the policy repo rate unchanged for the fourth time in a row as it maintains a tight vigil on inflation.
Announcement After MPC Meeting
This announcement came after a three-day meeting of the Monetary Policy Committee (MPC), and RBI Governor Shaktikanta Das stated that the decision was unanimous. Shaktikanta Das, in a press conference on Friday, stated that the MPC has decided to maintain the key policy rate, the repo rate, at 6.5%.
No Change in GDP Forecast
There has been no change in the GDP forecast either. Taking all factors into account, the real Gross Domestic Product (GDP) growth rate for the fiscal year 2023-24 is estimated to remain at 6.5%. For the first quarter of the next fiscal year 2024-25, a real GDP growth rate of 6.6% is anticipated.
Repo Rate Increased Six Times Between 2022 and February 2023
It’s worth noting that RBI had increased the policy repo rate six times consecutively between May 2022 and February 2023. The Reserve Bank had raised it from 4% in May 2022 to the current 6.5%. The last change occurred in February 2023 when it was raised from 6.25% to 6.5%. Prior to that, the RBI had decided to keep the interest rates stable in MPC meetings held in April, June, and August.
What is the Repo Rate?
The repo rate is the interest rate at which a country’s central bank (in the case of India, the RBI) lends money to commercial banks. It is a tool used to regulate the flow of funds in an economy and thereby control inflation.
