RBI keeps repo rate unchanged at 6.5% for 10th time in a row

The Monetary Policy Committee (MPC) has decided to keep the policy repo rate unchanged at 6.5 per cent, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Wednesday (October 9).

While this is the tenth time the central bank has kept the lending rate unchanged, this time it has changed its stance to its stance to 'neutral' that may lead to a cut in the forthcoming policies.

No effect of Federal cuts

RBI maintained status quo despite the US Federal Reserve lowering the benchmark rates by 50 basis points last month. The central banks of some developed nations have also reduced their interest rates.

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Announcing the fourth bi-monthly monetary policy for the current financial year, RBI Governor Das said the Monetary Policy Committee has decided to keep the repo rate unchanged at 6.5 per cent.

The RBI has maintained status quo on benchmark interest rate since February 2023.

Growth projection unchanged

The central bank has also kept the growth projection unchanged at 7.2 per cent for current financial year.

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Das said RBI will remain watchful of elevated food inflation even when India GDP growth remains strong.

"The standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) and the bank rate stand at 6.75 per cent. The NPC decided unanimously to change the stance to neutral and to remain unambiguously focused on a durable alignment of inflation with the target while supporting growth. The NPC noted that currently, the macroeconomic parameters of inflation and growth are well balanced. Headline inflation is on a downward trajectory though its pace has been slow and uneven," Das said.

This was the first meeting of the reconstituted MPC. The three newly appointed external members are Ram Singh, Saugata Bhattacharya and Nagesh Kumar.

The MPC was reconstituted by the government last month