In an announcement at the Monetary Policy Committee meeting on Wednesday, Reserve Bank of India Governor Shaktikanta Das said the central bank has decided to keep the policy repo rate at 6.5 per cent for convention the 10th consecutive meeting. The decision was made by a majority vote, with 5 out of 6 MPC members in favour. The Sustainable Deposit Facility (SDF) rate is 6.25 per cent, while the marginal standing facility (MSF) rate and savings rate remain at 6.75 per cent.
Shift to a neutral position to balance growth and inflation
Governor Das pointed out that there has been a shift in the RBI’s monetary policy outlook towards each side, stressing the central bank’s commitment to matching inflation with its objectives while supporting economic growth “The MPC decided that monetary policy positions will be shifted to neutral, and focus on inflation and objectives consistent with the target sustainably, ” he said. He said this new position reflects the RBI’s balanced approach to managing inflationary pressures without jeopardising economic growth.
Inflation risks and global economic uncertainty remain
The RBI’s focus is on achieving stable inflation in line with long-term objectives and fostering sustainable economic expansion. The central bank aims to remain flexible in responding to inflation and growth needs, especially given the ongoing inflation risks in the face of global economic uncertainty.
Meeting on inflation and economic growth
The Reserve Bank of India’s Monetary Policy Committee (MPC) convened on October 7, drawing widespread attention when it fixed the repo rate at 6.50 per cent for the ninth session. The MPC controls the delicate balance between managing inflation risks and enhancing economic growth.
Inflation: Under scrutiny
The Committee is closely monitoring important factors, including persistent inflation, especially on food prices and geopolitical tensions affecting global oil prices Recent data from the Department of Statistics and Operations noted that the All India Consumer Price Index (CPI) inflation rose to 3.65 per cent in August, RBI 2-6 per cent. But food inflation rose to 5.65 per cent, above the central bank’s medium-term target of 4 per cent, raising fresh inflation concerns.
Focus on financial stability
Despite the challenges posed by rising food prices, the RBI remains committed to facilitating monetary recovery in the post-pandemic environment. MPC’s ongoing assessment of inflation and growth prospects will be an important factor in shaping future monetary policy decisions.
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