The RBI kept interest rates steady at 5.25 %. In announcing the first bi-monthly monetary policy for this fiscal year, RBI Governor Sanjay Malhotra said that the Monetary Policy Committee has unanimously decided to maintain the repo rate at 5.25% with a neutral stance.
RBI keep repo rate steady at 5.25%
As a result, the standing deposit facility rate remains at 5 %. The marginal standing facility rate and the Bank Rate are also unchanged at 5.50 %. The bi-monthly meeting of the committee began on Monday under the Governor’s leadership.
The Monetary Policy Committee expects the GDP for the last financial year to be 7.6 %. For the current fiscal year, it expects a growth rate of 6.9 %. The RBI has projected that CPI inflation for this financial year will be 4.6 %.
Mr. Malhotra said, “Persistently high energy prices due to the West Asia conflict and possible El Nino conditions pose risks to inflation.”
Still waiting for wait and see approach due to West Asia conflict
Regarding the West Asia conflict, the RBI is taking a wait-and-see approach, noting the changing situation and the evolving outlook for growth and inflation. Consequently, the Monetary Policy Committee voted to keep the policy rate unchanged and remains vigilant. They will closely monitor incoming information and assess the balance of risks.
The Governor mentioned that the West Asia conflict will negatively affect growth. He added that rising input costs tied to increased energy prices and international freight and insurance, along with supply chain disruptions, could limit the availability of essential inputs for downstream sectors and affects growth.
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