RBI Monetary Policy 2023: Reserve Bank Keeps Repo Rates Unchanged At 6.5%

New Delhi: The Reserve Bank of India (RBI) on Thursday kept the repo rates unchanged at 6.5 percent. The Monetary Policy Committee (MPC) of the central bank unanimously decided to take a consecutive pause in its second bi-monthly monetary policy meeting of FY24 after a rate hike seen in previous six consecutive policies.

The Monetary Policy Committee meeting of the RBI took place on June 6-8. A year is divided into six bimonthly reviews of the central bank's monetary policy. Additionally, there are out-of-cycle reviews, where the central bank holds extra sessions in urgent situations.

Announcing the Monetary Policy, RBI Governor Shaktikanta Das said that MPC will continue to take policy actions promptly and appropriately to keep inflation expectations firmly anchored. "Headline inflation is above the target of 4 percent and expected to remain so during rest of the year," he added.

The RBI Governor emphasised that Indian economy and financial sector stand strong and resilient amidst unprecedented global headwinds. He further said that pace of global economic activity to decelerate due to geopolitical situation adding that close and continued vigil on evolving inflation is absolutely necessary.

Governor Das said that MPC has decided to remain focussed on withdrawal of accommodation of policy stance.

The Central Bank has lowered retail inflation projection to 5.1 percent during FY'24 from earlier estimate of 5.2 percent. Governor Das said, "RBI retains growth projection at 6.5 percent for FY'24, expects 8 percent growth in Q1, 6.5 percent in Q2, 6 percent in Q3 and 5.7 percent in Q4."

RBI has also lowered retial inflation projection to 5.1 percent during FY'24 from earlier estimate of 5.2 percent. RBI Governor said that GDP growth in Q1 this fiscal year expected at 8 percent.

"Domestic demand condition remains supportive of growth; rural demand on revival path. RBI will remain nimble in its liquidity management while ensuring adequate resources for productive requirements of economy," he added.

A weapon of monetary policy that normally works to reduce demand in the economy and lower inflation is raising interest rates.