RBI does it differently than the West amid banks turmoil. Here's why repo rate pause is for banking sector
As per RBI's data, the average daily absorption under the LAF moderated to ₹1.4 lakh crore during February-March from an average of ₹1.6 lakh crore in December-January. During 2022-23, money supply expanded by 9% and non-food bank credit rose by 15.4%.
With the pause in repo rate in April policy, RBI has likely decided to wait and watch the impact of the past rate hikes while also ensuring sustainability in the financial systems. Unlike other major central banks which hiked key rates despite banks' turmoil, RBI took a different route this time. When inflation is still high, RBI kept the repo rate unchanged at 6.5%, which is already at four years high. But, RBI maintained its monetary policy stance of “withdrawal of accommodation" to ensure that inflation progressively aligns with the target while supporting growth.