RBI keeps repo rate unchanged at 6.50%

The central bank projected inflation to be 5.1% and the GDP growth rate at 6.5% in the financial year 2023-’24.

Jun 8, 2023 - 11:30

The Reserve Bank of India’s Monetary Policy Committee on Thursday decided to keep the repo rate unchanged at 6.50%. The repo rate is the interest rate at which the central bank lends money to commercial banks.

In April, the central bank had kept the repo rate unchanged at 6.50% after six consecutive hikes which saw the lending rates go up by 250 basis points, or 2.50%, since May last year.

Central banks usually increase key lending rates at times of high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers which is expected to help curb prices rise due to high inflation.

Monetary Policy Statement by Shri Shaktikanta Das, RBI Governor - June 08, 2023 https://t.co/R9mQDcr70D— ReserveBankOfIndia (@RBI) June 8, 2023

On Thursday, Reserve Bank of India Governor Shaktikanta Das said that retail inflation is projected to be at 5.1% for the financial year 2023-’24. In April, the central bank had predicted that inflation for the current financial year would be 5.2%.

“We need to move towards our inflation target of 4%,” Das said. The central bank aims to keep retail inflation within the range of 2% to 6%.

Data from the Union government showed that India’s retail inflation dropped to 4.70% in...