The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday kept the key repo rate unchanged at 6.5 per cent for the seventh consecutive meeting, as it focused on reigning in retail inflation that has stayed above its 4 per cent target.
The repo rate is the interest rate at which banks borrow funds from the RBI to overcome short-term liquidity mismatches.
“It was decided by a majority of 5:1 to keep the interest rate unchanged at 6.50 per cent. Consequently, the Standing Deposit Facility rate remains at 6.25 per cent. The Marginal Standing Facility (MSF) rate and Bank Rate remain at 6.75 per cent,” said Das.
The MPC retained the stance of ‘withdrawal of accommodation’ with a majority of five votes.
With the India Meteorological Department’s (IMD) recent announcement of above-normal temperatures expected during April-June, Das said the RBI needs to closely monitor the prices of vegetables, fruits, and other perishable items to mitigate volatility.
“The tight demand-supply situation in certain categories of pulses and the production outcome of key vegetables want close monitoring especially in the background of the forecast of above normal temperature in the coming months” Das said.
Going forward, the outlook for agriculture and rural activity appears bright, he said.
The strengthening of rural demand, improvement in employment condition is expected to boost private consumption, Das added.
The Monetary Policy Committee was constituted under the Reserve Bank of India Act, 1934. It is a six-member committee comprising three members from RBI including Governor Shaktikanta Das and three members appointed by the central government. The three-day review meeting of the MPC that commenced on April 2 concluded today.
(With ANI input)
