RBI's Monetary Policy Committee keeps repo rate unchanged at 6.5% for 5th straight time
MPC) unanimously opted to maintain the repo rate at 6.5 per cent for the fifth consecutive time, RBI Governor Shaktikanta Das said on Friday. The decision, following a three-day bi-monthly meeting, underscores the committee's commitment to its current policy stance.
Governor Das highlighted the central bank's continued focus on the withdrawal of accommodation stance.
This decision comes in light of inflationary pressures moderating closer to the RBI's target range of 2-6 per cent and a robust economic expansion in the first half of the fiscal year, driven by notable growth in the manufacturing and construction sectors.
The second-quarter GDP growth exceeded expectations, registering a remarkable 7.6 per cent increase. Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Shares and Stock Brokers, noted the positive surprise in Q2 GDP numbers and highlighted various high-frequency indicators like IIP, Core, and PMI pointing towards strong growth early in Q3.
The decision to maintain the status quo aligns with the predictions of economists, as per an ET Poll of 10 experts, anticipating no change in the repo rate.
Notably, the committee had implemented a pause on rate hikes after raising the repo rate by 250 basis points from May 2022 to February 2023.
While core inflation shows a downward trend, the persisting concern revolves around food inflation. Rising prices of essential commodities like onions and tomatoes may keep the headline Consumer Price Index (CPI) elevated in the coming months.
