RBI Monetary Policy: MPC decides to keep repo rate unchanged at 6.5%

The key policy repo rate remain unchanged at 6.5 per cent, Reserve Bank of India (RBI) Governor Shaktikanta Das announced on Thursday.

The decision to keep the rate at which RBI lends money to commercial banks or financial institutions in India unchanged was taken during three-day Monetary Policy Committee (MPC) meeting.

“MPC voted unanimously to leave repo rate unchanged at 6.5 per cent,” RBI Governor Shaktikanta Das said.

The RBI has kept the MSF, or Marginal Standing Facility, rate unchanged at 6.75 per cent.

MSF rate is the interest rate at which the RBI provides money to scheduled commercial banks facing acute shortage of liquidity.

Headline inflation to remain above 4%

The RBI Governor announced that headline inflation is expected to remain above 4 per cent throughout the 2023-24 fiscal.

“We need to move towards our inflation target of 4 per cent. RBI will remain watchful and proactive in dealing with emerging risks,” Das said.

India’s central bank has maintained the real GDP forecast as estimated earlier in April at 6.5 per cent on the back of higher Rabi crop output, moderating commodity prices, monsoon trajectory and the government’s plan of higher capital expenditure.

Also, the FY24 GDP projections for the second half of the year have been lowered marginally, while for the first half it has been raised from earlier projections.

RBI’s CPI Inflation forecast

• CPI inflation forecast for April-June 2023 cut to 4.6 per cent from 5.1 per cent
• CPI inflation forecast for July-September 2023 cut to 5.2 per cent from 5.4 per cent
• CPI inflation forecast for October-December 2023 retained at 5.4 per cent
• CPI inflation forecast for January-March 2024 retained at 5.2 per cent

Sensex and Nifty were trading in the green after the RBI’s monetary policy announcement.

At 10:54 IST, Sensex was trading at 63,280.56, up 137.60 points or 0.22 per cent, while Nifty was 44.20 points or 0.24 per cent higher at 18,770.60.

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