The Reserve Bank of India made the decision to maintain the policy rate unchanged for the seventh consecutive time, underlining its commitment to monitoring the potential upward risks associated with food inflation.
This decision comes after a pause in the rate increase cycle that commenced in April of the previous year, following a series of six consecutive rate hikes amounting to 250 basis points since May 2022.
During the announcement of the first bi-monthly monetary policy for the current fiscal year, RBI Governor Shaktikanta Das stated that the Monetary Policy Committee (MPC) has resolved to keep the repo rate steady at 6.5 percent. Das further emphasized the MPC's vigilance regarding food inflation.
The six-member rate-setting panel, with a majority vote of 5:1, opted to maintain the status quo on interest rates while remaining focused on transitioning away from an accommodative stance.
As of February, the Consumer Price Index (CPI)-based inflation stood at 5.1 percent. It's worth noting that the government has tasked the RBI with ensuring that CPI inflation remains within the target of 4 percent with a margin of 2 percent on either side.
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