Reserve Bank of India Keeps Key Interest Rate Unchanged Amidst Robust Economic Growth

A Reserve Bank of India (RBI) logo is seen inside its headquarters in Mumbai, India

Reserve Bank of India Keeps Key Interest Rate Unchanged Amidst Robust Economic Growth

  The Reserve Bank of India (RBI) opted to maintain its key interest rate on Friday, in line with market expectations, as the economy continues to display robust growth, providing room to focus on managing inflation towards its medium-term goal of 4%.

The decision was made by the Monetary Policy Committee (MPC), comprising three RBI members and three external members, who voted to hold the repo rate at 6.50% for the eighth consecutive policy meeting. Governor Shaktikanta Das, speaking on behalf of the committee, stated, "Four out of six MPC members supported the decision to maintain the repo rate, emphasizing the central bank's dedication to aligning inflation with the targeted level."

In a recent statement, Governor Das reiterated the RBI's commitment to ensuring that inflation remains in line with the 4% target while also taking into account the evolving economic conditions both domestically and globally.

The decision to keep the repo rate unchanged came as no surprise to most analysts, with almost all of the 72 economists surveyed by Reuters anticipating the holding pattern at 6.50%. The prevailing sentiment among economists suggests that the current rate of 6.50% signals the peak of the ongoing monetary cycle.

The committee revealed that, by a majority vote of four out of six members, it will be maintaining the 'withdrawal of accommodation' stance, reflecting the cautious approach taken by the central bank to balance the needs of economic growth and price stability.

"This decision aligns with the current economic scenario, where we aim to strike a balance between supporting growth and managing inflation," Governor Das commented.

Looking ahead, the RBI remains vigilant on monitoring key economic indicators to ensure stability and sustainable growth in the upcoming quarters. With the global economic landscape posing uncertainties, the central bank stands prepared to undertake necessary measures to safeguard India's economic resilience.

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[MD Ahasan Habib]