Reserve Bank of India (RBI) Governor Shaktikanta Das affirmed on Thursday that the repo rate would remain stable at 6.5%, maintaining a status quo for the sixth consecutive time. The decision comes amid efforts to curb inflation, with the last rate hike occurring in February of the previous year, raising it to 6.5% from 6.25%. This measure was taken in response to global factors influencing inflation. The December 2023 meeting opted to keep the rate unchanged.
Retail inflation, which peaked at 7.44% in July 2023, has gradually declined during the current fiscal year. However, it persists at 5.69% as of December 2023, within the Reserve Bank’s comfort range of 4-6%.
The Monetary Policy Committee (MPC), chaired by RBI Governor Shaktikanta Das, initiated its three-day discussions on Tuesday. Market experts widely anticipated the continuation of the repo rate at 6.5%, marking the sixth consecutive instance, primarily due to concerns about inflation.
The government has directed the central bank to maintain retail inflation, based on the Consumer Price Index (CPI), at 4%, allowing a margin of 2% on either side.
The MPC is responsible for determining the policy repo rate to achieve the inflation target while also considering the imperative of fostering economic growth. Simultaneously, Governor Das revealed the RBI’s plan to introduce guidelines for a principle-based framework facilitating the authentication of digital payment transactions. This move underscores the central bank’s commitment to advancing secure and efficient digital financial transactions.
As the MPC concludes its deliberations, the decision to uphold the repo rate underscores the cautious approach to balancing inflationary concerns with the imperative of sustaining economic growth. Additionally, the forthcoming guidelines on digital payment authentication reflect the RBI’s commitment to enhancing the security and reliability of digital transactions in the evolving financial landscape.
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