India cenbank holds rates as widely expected to further tame prices

By Thomson Reuters Jun 6, 2024 | 11:38 PM

MUMBAI (Reuters) – The Reserve Bank of India (RBI) kept its key interest rate unchanged on Friday in a widely expected move as robust economic growth continues to provide space to focus on bringing down inflation towards its medium-term target of 4%.

The Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the repo rate unchanged at 6.50% for an eighth straight policy meeting.

Four out of six MPC members voted in favour of the repo rate decision, Governor Shaktikanta Das said in his statement.

The central bank wants to ensure that inflation aligns with the target, he added.

All but one of 72 economists in a Reuters poll had expected the MPC to hold the repo rate steady at 6.50%. Most economists believe the 6.50% rate is the peak of the current monetary cycle.

The committee decided by a majority of four out of six votes to retain the ‘withdrawal of accommodation’ stance.

The MPC last changed rates in February 2023, when the policy rate was raised to 6.50%. Annual retail inflation eased slightly to 4.83% in April from 4.85% in March, but was still well above the MPC’s target.

The economy expanded at a faster-than-expected pace of 7.8% in the March quarter, official data showed last week, taking the South Asian nation’s full-year growth to 8.2%.

(Reporting by Swati Bhat and Sudipto Ganguly; Writing by Ira Dugal; Editing by Savio D’Souza)