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

New Delhi: Contrary to widespread speculations in the media, 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 decided to take a pause after a rate hike seen in previous six consecutive policies.

RBI has kept the repo rate unchanged at 6.5% with readiness to act should the situation so warrant, Governor Shaktikanta Das while announcing the three-day meeting of its Monetary Policy Committee said.

Five out of six members of MPC voted to remain focused on the withdrawal of accommodation to ensure inflation aligns with target while focusing on growth, RBI Governor Shaktikanta Das said on Thursday. 

The Monetary Policy Committee meeting of the RBI took place on April 3, April 5, and April 6 to begin the central bank's first bimonthly review of the new fiscal year. 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.

In order to control inflation, the RBI's Monetary Policy Committee (MPC) decided to increase the repo rate by 25 basis points, to 6.5 percent, at its most recent meeting in early February. Since May 2022, the RBI has increased the repo rate—the interest rate at which it loans to banks—by 250 basis points. A weapon of monetary policy that normally works to reduce demand in the economy and lower inflation is raising interest rates.

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