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The six-member monetary policy committee (MPC) unanimously voted to keep the policy repo rate on hold at 6.50 per cent to tackle retail inflation, which is still above its upper tolerance level of 6 per cent, as per the latest reading amid a patchy South-West monsoon, and rising oil prices.
This is the fourth meeting on the trot that the MPC has kept the repo rate (the interest rate at which banks and primary dealers borrow funds from RBI to overcome short-term liquidity mismatches) on hold. Market experts said the MPC’s hawkish pause was on expected lines.
Though retail inflation had eased to 6.83 per cent in August 2023, from a 15-month high of 7.44 per cent in the previous month, it is still above the MPC’s upper tolerance level of 6 per cent. The committee has held the repo rate rock steady in all four meetings in FY24 so far.
The MPC also decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation, to ensure that inflation progressively aligns with the target, while supporting growth.
“It is a status quo piolicy,” RBI Governor Shaktikanta Das said
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