RBI Keeps Repo Rate Unchanged For Seventh Consecutive Time
In its latest monetary policy announcement, the Reserve Bank of India (RBI) has decided to maintain the Policy Repo Rate at 6.5%, marking the seventh consecutive time the rate has remained unchanged. RBI Governor Shaktikanta Das underscored the central bank”s commitment to stability and said the growth-inflation dynamics have played out favourably since the last policy announcement and growth has continued to sustain its momentum surpassing all projections.
An unchanged repo rate indicates that loan interest rates are likely to remain stable, providing continuity for borrowers and financial institutions alike. The repo rate, the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds, serves as a crucial tool in controlling inflation and managing the economy.
India”s foreign exchange reserves have surged to an all-time high of $645.6 billion as of March 29, 2024, reflecting the country”s robust economic position. Despite global economic challenges, India”s fiscal consolidation and accelerated GDP growth have set it apart on the global stage.
Domestic economic activity continues to expand at a rapid pace, buoyed by fixed investment and a favorable global environment. The second advance estimates project a real GDP growth rate of 7.6% for the fiscal year 2023-24, marking the third consecutive year of growth exceeding 7%.
While headline inflation has eased to 5.1% in January and February, down from a peak of 5.7% in December, the RBI remains vigilant in ensuring inflation descends to the target of 4%. The sustained momentum in economic growth affords policymakers the flexibility to maintain focus on inflation management.
In addition to maintaining the Policy Repo Rate, the RBI has opted to keep the Standing Deposit Facility rate at 6.25%, and the Marginal Standing Facility rate and Bank Rate at 6.75%. These decisions reflect the central bank”s cautious approach in navigating the evolving economic landscape while prioritising stability and growth.
“As we progress towards RBI at 100, the upcoming decade is going to be a transformational journey. The Reserve Bank will continue to focus on preserving
financial stability and promoting a system that is robust, resilient and future-ready to support economic growth. Price stability will be a key component of this endeavour. Turning to the present, inflation is on a declining trajectory and GDP growth is buoyant. At this juncture, we should not lower our guard but continue to work towards ensuring that inflation aligns durably and sustainably to the target. Our goal is in sight and we must remain vigilant,” Dr Das said.
