New Delhi, June 7: In its latest monetary policy review on Friday, the Reserve Bank of India (RBI) opted to keep the key interest rates unchanged, emphasizing its commitment to striking a balance between fostering economic growth and managing inflation.
RBI Governor Shaktikanta Das, addressing the outcome of the Monetary Policy Committee (MPC) meeting, announced that the current repo rate of 6.5 percent would remain unchanged, with a majority 4:2 vote in favor of the decision.
Highlighting the global economic challenges, Governor Das asserted, "While the world faces ongoing crises, India is poised for sustained high growth driven by its demographic dividend, productivity, and sound government policies. However, we must remain vigilant in light of the volatile global landscape."
The last adjustment in interest rates occurred in February 2023, when the repo rate was raised to 6.5 percent. Subsequently, rates have been maintained to bolster economic expansion despite inflationary pressures.
The repo rate, determining the interest rate at which the RBI lends short-term funds to banks, influences the cost of loans for both corporate entities and consumers, thereby impacting investment and consumption expenditure.
A decrease in interest rates typically stimulates investment and spending, fostering economic expansion. However, it can also elevate inflationary pressures as demand for goods and services rises.
While the country's annual retail inflation moderated to 4.83 percent in April, it remains above the RBI's medium-term target of 4 percent. With the economy registering a robust growth rate of 8.2 percent for 2023-24, economists suggest that the RBI may delay rate cuts until inflation aligns with its targeted level.
