RBI maintains pause for 3rd time in a row; keeps repo rate unchanged at 6.5%

RBI keeps policy rate unchanged for 3rd time; CPI inflation projection revised to 5.4%. MPC remains watchful of inflation and committed to aligning it to target level. Govt mandated RBI to ensure CPI inflation at 4% with 2% margin.

The Reserve Bank of India on August 10 decided to keep policy rate unchanged for third time in a row as it maintains heightened vigil on inflation.

The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022.

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the rate unchanged at 6.5%

He said the MPC will remain watchful of the inflation and remains resolute to its commitment to align inflation to the targeted level.

While keeping the interest rate intact, Mr. Das said headline inflation still remains above RBI's target of 4%.

The MPC meeting took place against the backdrop of consumer price-based (CPI) inflation on some food items like tomato, wheat and rice that have witnessed surge in price in the last few weeks. The CPI inflation projection for FY24 has been revised to 5.4%.

The government has mandated RBI to ensure CPI inflation at 4% with a margin of 2% on either side.