RBI MPC Highlights: It’s a Pause, Not A Pivot, Says RBI Governor On Decision To Hold Interest Rate
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progress made so far, while closely monitoring the domestic and global situations,” he said. This is against the Reuters poll that maintained that RBI will raise its main interest rate by 25 basis points on April 6 and then pause for the rest of the year.
However, the RBI MPC left the door open for future rate actions. “The MPC will not hesitate to raise the repo rate in future meetings,” said Shaktikanta Das. The central bank had already increased the repo rate by a total of 250 bps since May 2022 in order to contain inflation through which has remained above the RBI’s threshold of 6 per cent.
In the previous monetary policy in February this year, the RBI raised the key repo rate by 25 basis points to 6.50 per cent. This was the sixth consecutive hike in the key policy rate since May 2022, during which the RBI MPC has raised the repo rate by 250 basis points. A basis point is equal to a hundredth of a percentage point.
The RBI is mandated to keep the CPI inflation rate at 4 per cent, with a flexibility of 2 per cent up or down. However, according to the latest data available, India’s CPI inflation in February 2023 stood at 6.44 per cent, which is beyond the RBI’s upper limit of 6 per cent for the second consecutive month. The retail inflation had stood at 6.52 per cent in January 2023.
The World Bank on Tuesday revised downwards its FY2023-24 GDP forecast to 6.3 per cent, from 6.6 per cent forecast in December 2022. “Growth is expected to be constrained by slower consumption growth and challenging external conditions. Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures,” it said.
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