Lagatar24 Desk
New Delhi, Oct 6: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously decided to keep the key repo rate at 6.5 per cent, in line with economists’ forecasts, RBI Governor Shaktikanta Das declared on Friday.
This marks the fourth time that the 6-member MPC has opted to keep the key interest rates unchanged.
“After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC decided unanimously to keep the policy repo rate unchanged at 6.5 per cent. Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) and bank rate are at 6.7 per cent,” Das said.
Das mentioned that five of the six MPC members have chosen to prioritize the withdrawal of accommodation in order to facilitate a gradual alignment of inflation with the target while also supporting economic growth.
Shaktikanta Das provided an explanation of the MPC’s reasoning for the policy stance, stating that the overall inflation forecast is “clouded by the uncertainties” resulting from the decline in Kharif sowing for several important crops, such as pulses and oil seeds, reduced reservoir levels, and unstable global food and energy prices.
“The MPC observed that the recurring incidents of large and overlapping food price shocks can impart generalisation and persistence to headline inflation”, he said.
“Taking into account the evolving inflation growth dynamics and the cumulative policy repo rate hike of 250 basis points, which is still working through the economy, the MPC decided to keep the policy repo rate unchanged at 6.5 per cent,” Das further said.
“The MPC remains highly alert to undertake timely policy measures, as may be necessary, in order to align inflation to the target and anchor inflation expectations,” he added.
