The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022
Image used for representational purpose.
On Thursday, the Reserve Bank of India opted for a pause for the second time in a row, maintaining the key benchmark policy rate at 6.5 per cent as inflation moderates, reported PTI.
According to PTI, the rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022.
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RBI Governor Shaktikanta Das, while anouncing the bi-monthly monetary policy, said the Monetary Policy Committee (MPC) unanimously decided to keep the rate unchanged at 6.5 per cent.
While keeping the interest rate intact, Das said headline inflation still remains above RBI's target of 4 per cent and expected to remain so during the rest of the year. Inflation projection has been slashed marginally to 5.1 per cent from an earlier estimate of 5.2 per cent for current financial year.
He said retail inflation has been below the upper band of 6 per cent for the last two years.
The MPC meeting took place against the backdrop of consumer price-based (CPI) inflation declining to a 18-month low of 4.7 per cent in April. The Reserve Bank governor recently indicated that the May print would be lower than the April numbers. The CPI for May is scheduled to be announced on June 12.
The government has mandated RBI to ensure CPI inflation at 4 per cent with a margin of 2 per cent on either side.
The Reserve Bank retained the GDP growth projection for current fiscal year at 6.5 per cent, on the back of supportive domestic demand conditions. In April, the central bank had marginally revised upwards the 2023-24 GDP growth projection to 6.5 per cent, from its earlier forecast of 6.4 per cent, reported news agency PTI.
Domestic demand condition remains supportive of growth and also the demand in rural areas is on the revival path, RBI Governor Shaktikanta Das said while announcing the 2nd bi-monthly policy for 2023-24.
India's economy grew 6.1 per cent in the fourth quarter of 2022-23, pushing up the annual growth rate to 7.2 per cent, as against 7 per cent anticipated earlier.
(Compiled with inputs from PTI)
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