The Reserve Bank of India (RBI) has decided to keep its policy rate unchanged for the eighth consecutive time, demonstrating its commitment to maintaining a vigilant stance on inflation. This decision comes after a series of six consecutive rate hikes from May 2022, which resulted in a cumulative increase of 250 basis points. The pause in the rate increase cycle was initiated in April last year.
| Policy Repo Rate | : 6.50% |
| Standing Deposit Facility Rate | : 6.25% |
| Marginal Standing Facility Rate | : 6.75% |
| Bank Rate | : 6.75% |
| Fixed Reverse Repo Rate | : 3.35% |
| CRR | : 4.50% |
| SLR | : 18.00% |
Monetary Policy Announcement
RBI Governor Shaktikanta Das announced the decision during the second bi-monthly monetary policy meeting for the current financial year. The Monetary Policy Committee (MPC) has unanimously agreed to maintain the repo rate at 6.5%. In addition to this, the MPC will closely monitor the impact of food inflation while keeping in mind the expectation of a normal monsoon.
Revised Growth Projection
The RBI has revised its growth projection for the current financial year, increasing it to 7.2% from the previous estimate of 7%. This upward revision indicates optimism regarding the economic outlook.
Deliberations of the Rate-Setting Panel
The decision to keep the policy rate unchanged was made after careful deliberations by the RBI’s rate-setting panel, the Monetary Policy Committee (MPC). The discussions began on Wednesday and culminated in the announcement made by Governor Shaktikanta Das at 10 AM on June 7.
Mandate to Control Inflation
The government has entrusted the RBI with the responsibility of maintaining retail inflation at 4%, with a margin of 2% on either side. In April of this year, retail inflation stood at 4.83%. The MPC comprises three external members and three officials from the RBI. The external members of the rate-setting panel are Shashanka Bhide, Ashima Goyal, and Jayanth R. Varma.
The RBI’s decision to keep the policy rate unchanged reflects its continued focus on managing inflationary pressures while considering the overall economic growth trajectory.
