The Reserve Bank of India (RBI) today kept the key lending rate unchanged at 6.5 percent.
RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has unanimously decided to keep the policy repo rate unchanged.
Announcing the RBI's bi-monthly monetary policy, Mr Das said that the monetary policy actions are delivering desired results.
He said the committee will continue to take policy actions promptly and appropriately to keep inflation expectations firmly anchored.
Most analysts had expected the RBI to keep the repo rate unchanged this time as well. Barring the April pause, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 percent since May 2022
The unchanged repo rate means that bank loan and deposit rates are likely to remain unchanged till the next monetary policy meeting as well, as commercial banks reflect the RBI's lending rate in its interest rates for consumers.
India's central bank has lowered the inflation projection to 5.1 percent during FY24 from earlier estimate of 5.2 percent. Despite this slight decrease, the Governor emphasized that headline inflation is above the RBI's target of 4 percent and is expected to remain so for the rest of the year.
"Indian economy and financial sector stand strong and resilient amidst unprecedented global headwinds," he said.
The RBI maintained its GDP growth projection for the fiscal year 2023-24 at 6.5 percent.
While being optimistic on the outlook for the Indian economy, the RBI Governor flagged several risks as well. Mr Das said that weak external demand, global market volatilities, geopolitical tensions due to the war, and El Nino pose risks to the economy's growth in FY24.
Mr Das said that RBI will remain nimble in its liquidity management while ensuring adequate resources for productive requirements of economy.
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