The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), led by RBI Governor Shaktikanta Das, voted unanimously on Friday to hold the repo rate at 4%.
For the eleventh time in a row, the rate stayed steady. The MPC, on the other hand, increased the reverse repo rate from 3.35 percent to 3.50 percent, according to Das. The RBI's rate-setting panel also opted to keep the accommodating policy stance in place to let the economy expand and recover.
The MPC also resolved to maintain the 4.25 percent marginal standing facility (MSF). It lowered the GDP growth rate for FY23 from 7.8% to 7.2 percent, down from 7.8% in the previous meeting. Inflation for the current fiscal year is now forecast to be 5.7 percent, up from 4.5 percent in the February meeting.
On Wednesday, the RBI's rate-setting panel began a three-day meeting to discuss the next bi-monthly monetary policy. The MPC convened for the first time this fiscal year. The MPC has kept interest rates steady and maintained an accommodating monetary policy stance in the last ten meetings.
On May 22, 2020, the repo rate, or short-term lending rate, was last reduced. Since then, the rate has remained at an all-time low of 4%. The government has instructed the central bank to manage inflation at 4%, with a tolerance level of 2% for both the top and lower bounds.
The RBI chose to keep its benchmark lending rates at record low levels for the 10th consecutive meeting following the February MPC meeting in order to encourage a long-term recovery of the economy.
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