India c.bank keeps rate unchanged at 6.50%

The Reserve Bank of India (RBI) kept the policy repo rate unchanged at 6.50 per cent on Thursday. Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate are both maintained at 6.75 per cent.

According to the Central Bank statement, the Monetary Policy Committee (MPC) remains focused on withdrawing accommodation to align inflation with its target while supporting economic growth. The goal is to achieve a medium-term consumer price index (CPI) inflation target of 4 per cent within a +/- 2 per cent band.

Globally, the economic outlook is resilient but shows signs of moderation. Domestic economic activity remains strong, supported by improved monsoon rainfall and higher kharif sowing. Real GDP growth is projected at 7.2 per cent for 2024-25, with risks balanced, the MPC added.

In June, the headline inflation rose to 5.1 per cent due to increased food prices, although core inflation is at a low 3.1 per cent. Inflation is expected to average 4.5 per cent for the current fiscal year. The MPC remains committed to its disinflationary stance until inflation consistently aligns with its target.

The MPC’s decision was supported by a majority of members, with some advocating for a rate cut.

Attribution: Reserve Bank of India statement