The Reserve Bank of India (RBI) has maintained the key policy repo rate at 6.5% in its latest monetary policy update on August 10, 2023. This decision marks the third consecutive meeting in which the RBI has kept the repo rate unchanged.
The repo rate is the interest rate at which the RBI lends money to commercial banks. By keeping the repo rate unchanged, the RBI is signaling that it is comfortable with the current level of inflation and economic growth.
In his press conference, RBI Governor Shaktikanta Das said that the Indian economy remains resilient and has been a bright spot in the global economy. Despite recent challenges, the Indian economy is projected to grow at 6.5% in FY24.
However, Das also noted that inflation remains a challenge. The RBI has revised its retail inflation projection for FY24 to 5.4% from the earlier estimate of 5.1%. The projection for different quarters of FY24 are set at 6.2% for Q2, 5.7% for Q3, and 5.2% for Q4.
The RBI is committed to managing inflation and will take necessary steps to ensure that inflation remains within its target range. However, the central bank also wants to ensure that the growth momentum is not affected.
In order to boost digital payments, the RBI has introduced measures such as allowing offline payment of Unified Payments Interface (UPI) transactions using near-field communication (NFC) and raising the payment limit for UPI Lite transactions from Rs 200 to Rs 500.
The RBI’s monetary policy decision is a balanced one. It takes into account the need to manage inflation while also ensuring that the growth momentum is not affected. The decision is likely to be welcomed by businesses and consumers alike.
Analysts have welcomed the RBI’s decision to maintain the repo rate at 6.5%. They believe that this decision is appropriate given the current economic conditions.
“The RBI has taken a balanced approach by keeping the repo rate unchanged,” said one analyst. “This will help to manage inflation while also supporting growth.”
Another analyst said that the RBI’s decision is “a sign of confidence in the Indian economy.” He added that “the RBI is confident that the Indian economy can withstand the current challenges and continue to grow.”
The RBI’s monetary policy decision is a positive one for the Indian economy. It shows that the central bank is committed to managing inflation while also supporting growth. The decision is likely to boost investor confidence and help to attract foreign investment.