Repo rate to remain at 6.50%, RBI to focus on controlling inflation, supporting growth

Mumbai: The repo rate will remain at 6.50 per cent with the unanimous decision taken by the RBI’s Monetary Policy Committee (MPC) in this regard. The Reserve Bank of India Governor Shaktikanta Das announced the decision on its bimonthly monetary policy today.

The MPC has also decided, by a majority of five out of six members, to maintain a focus on "withdrawal of accommodation" to ensure inflation aligns with the target while supporting growth.

The RBI Governor noted that amidst volatility, India's banking and non-banking financial service sectors remain healthy, and financial markets have evolved in an orderly manner.

The RBI chief added that economic activity in India remains resilient and real GDP growth is expected to have been 7 per cent in FY23, with GDP expected to jump 6.5 per cent in the current financial year.

Retail inflation is expected to moderate to 5.2 per cent in FY2023-24, according to the RBI Governor. The standing deposit facility (SDF) rate will remain unchanged at 6.25 per cent, and the marginal standing facility (MSF) rate and the bank rate at 6.75 per cent.

The Governor emphasised that the decision to pause the repo rate is only for this meeting, and the MPC would not hesitate to take further action if required in future meetings. The MPC has raised the repo rate by 250 bps in the last 11 months, starting from May 2022.

The repo rate is the key lending rate used by the RBI to lend money to commercial banks against government securities.