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The Monetary Policy Committee of the Reserve Bank of India has unanimously decided to keep repo rate unchanged at 6.5% after having raised it at each of six previous meetings, as risks to growth have risen following recent global financial turmoil.
RBI Governor Shaktikanta Das said the central bank is ready to act against inflation, and despite the decision to pause a rate hike, the MPC would not hesitate to take any action in future.
The RBI’s current tightening cycle has seen it raise the repo rate by a total of 250 bps since May last year.
While keeping the interest rate intact, Mr. Das said core inflation remains sticky. Core inflation generally refers to inflation in manufactured goods.
Retail inflation in February stood at 6.44% compared to 6.52% in the previous month. MPC takes into account retail inflation numbers for setting the interest rates.
However, the RBI expects inflation in 2023-24 to moderate to 5.2% while real GDP growth for the fiscal is projected at 6.5%.
The MPC has three members from the central bank and three external members.
(With inputs from agencies)