The Reserve Bank of India (RBI) on Thursday, 10 August announced that the repo rate will remain unchanged at 6.5 percent.
The Monetary Policy Committee, which met on 8, 9 and 10 August, unanimously decided to keep the policy repo rate unchanged at 6.5 percent," RBI Governor Shaktikanta Das said.
This is the third time the central bank has kept the repo rate unchanged.
RBI has also raised the inflation projection from 5.1 percent to 5.4 percent for FY23-24 due to increased vegetable prices.
“While the vegetable price shock may reverse quickly, possible El Nino weather conditions, along with global food prices need to be watched closely, against the backdrop of skewed Southwest Monsoon," Das said.
Meanwhile, for the current fiscal year, the retail inflation projections are:
Q2: 6.2 percent
Q3: 5.7 percent
Q4: 5.7 percent
“The cumulative rate hike of 250 basis points (from May 2022 to February 2023), undertaken by the MPC so far, is working its way into the economy. Nevertheless, domestic economic activity is holding up well, and is likely to retain its momentum, despite, weak external demand. Considering this confluence of factors, the MPC decided to remain watchful and evaluate the emerging situation," the Governor said.
The central bank has also retained the GDP forecast at 6.5 percent.
"Our economy has continued to grow at a reasonable pace becoming the 5th largest economy in the world, contributing around 15 percent to global growth," Das said.