In a surprise move, the Reserve Bank of India (RBI) held its key repo rate steady after six consecutive hikes, citing the need to monitor the impact of recent global financial turbulence on the economy.
The central bank reaffirmed its policy focus on “withdrawal of accommodation” but left the door open for further rate hikes if necessary. However, a number of economists now expect the RBI to remain on hold. RBI Governor Shaktikanta Das said the decision was a pause, not a pivot.
The central bank’s monetary policy committee unanimously voted to retain the key lending rate at 6.50%. The RBI has raised the repo rate by a total 250 basis points since May last year.
The central bank sees inflation at 5.2% in 2023-24, and GDP growth is expected to reach 6.5% in the financial year beginning April 1. Retail inflation remained above the central bank’s mandated target range for 10 out of the last 12 readings, rising 6.44% year-on-year in February.