The Reserve Bank of India (RBI) on Friday kept its key lending rate unchanged at 6.5% for the seventh consecutive time. The decision was taken by a 5:1 majority at the bi-monthly Monetary Policy Committee (MPC) meeting, said RBI Governor Shaktikanta Das. An unchanged repo rate means the loan interest rates too are likely to remain unchanged.
Inflation is moving closer to targets, said the RBI Governor, projecting retail inflation for the current year at 4.5%. Core inflation has declined steadily over the last nine months while fuel component remained in deflation for six straight months, he said.
Robust growth prospects provide space to the policy to remain focussed on inflation, said the RBI Governor.
However, uncertainties in food prices continues to pose challenges, he said, adding that the MPC remains vigilant to the upside risk to inflation that may derail the path of disinflation. “Food inflation continues to exhibit considerable volatility which is impeding the ongoing disinflation process,” he said.
The RBI Governor said the country is projected to grow 7% this financial year, with 7.1% growth expected in the April-June quarter and 6.9% in the July-September quarter. “The risks are evenly balanced,” he added.
Mr Das said global economy has remained resilient and global trade is expected to grow faster in 2024.
He also said that India’s liquidity situation improved in March while the average borrowings under the marginal standing facility, which allows banks to borrow funds, moderated.
India continues to remain the largest receiver of remittances with the country’s foreign portfolio investment seeing a significant turnaround, the RBI Governor said, adding that its forex reserves are now at record high.