RBI Keeps Repo Rate Unchanged, Focus on Inflation Control

Aakhir Tak – In Shorts

• RBI retains the repo rate at 6.5%.
• Governor Shaktikanta Das stresses inflation control as the priority.
• GDP growth projection revised to 6.6%.
• Food inflation relief unlikely before the fourth quarter.
• The policy committee maintains a neutral stance.

Aakhir Tak – In Depth

Repo Rate Unchanged Amid Inflation Concerns

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has kept the repo rate steady at 6.5% for the 11th consecutive time. Governor Shaktikanta Das emphasized that this decision aligns with the bank’s focus on curbing inflation, which remains above the target range.

Balancing Inflation and Growth

Inflation remains a critical challenge, driven primarily by soaring food prices. Das cautioned that significant relief in food inflation is unlikely before the fourth quarter. Simultaneously, the GDP growth forecast for the fiscal year has been lowered to 6.6%, reflecting economic strains.

Impact of Inflation on Economy

Das highlighted that inflation erodes disposable income, adversely affecting private consumption—a major driver of GDP growth. The central bank’s inflation projection for the current fiscal year stands at 4.8%.

What Lies Ahead?

The RBI’s neutral stance provides flexibility to adapt to evolving economic conditions. However, global commodity prices and domestic supply-side measures will play crucial roles in determining the effectiveness of this strategy.

Aakhir Tak – Key Takeaways to Remember

• Repo rate unchanged at 6.5%.
• GDP growth forecast revised to 6.6%.
• Inflation projection set at 4.8%.
• RBI maintains a neutral stance.
• Inflation control remains the top priority.

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