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Business News/ Industry / Banking/  RBI Monetary Policy Committee Meeting: Repo rate unchanged at 6.5%, stance accommodative
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RBI Monetary Policy Committee Meeting: Repo rate unchanged at 6.5%, stance accommodative

This is in-line with expectations of a majority of economists who estimated no change in RBI's key rates.

The RBI has kept repo rate at 6.5% since February 2023 (PTI)Premium
The RBI has kept repo rate at 6.5% since February 2023 (PTI)

The Reserve Bank of India (RBI) has kept repo rate unchanged at 6.5 percent, Governor Shaktikanta Das announced on October 6.

Further, the central bank has also maintained status quo on the policy stance. This is retained at ‘withdrawal of accommodation’ with 5 of 6 MPC members voting in favour of this, Das announced.

"Monetary policy focus remains to align inflation at 4 percent target, he added.

The Sensex and Nifty remained positive as the RBI MPC decision was announced. Indices gained around 0.3 percent in early trading on Friday with most sectors gaining in today's session. 

The decision is in-line with expectations of market analysts and economists who widely expect the central bank to keep rates unchanged on India's easing inflation print and maintain its hawkish policy stance.

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Majority analysts had estimated that the RBI would keep its key repo rate unchanged at 6.5 percent at the conclusion of the MPC meeting, with only a few expecting a 25 basis points (bps) hike. D-Street analysts also did not expect the RBI to change its stance from ‘withdrawal of accommodation’.

However, the recent uptick in international crude oil prices are likely to keep the MPC's focus on India's inflation projections in the forthcoming quarters.

At the last MPC meeting held in August 2023, the RBI voted for a pause in rate hike stayed with the 6.5 percent repo rate - which it has maintained since February. Prior to that, the central bank had cumulatively hiked the repo rate by 250 bps starting from an off-policy meeting in May 2022 and continuing for five subsequent meetings till February 2023, over inflationary pressures led by the Russia-Ukraine war and the remainder effects of the COVID-19 pandemic.

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The RBI's primary goal is to bring inflation down but it also would not want to damage India's economic growth.

Experts pointed out that domestic inflation spiked to 7.4 percent in July and fell back to 6.8 per cent in August and possibly will move towards 5.5 percent by December. However, it remains well above the 4 percent target and will likely remain so for at least a few more quarters.

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Published: 06 Oct 2023, 10:06 AM IST
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