No Raise In Repo Rate, RBI Keeps It Steady At 6.5%

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No Raise In Repo Rate, RBI Keeps It Steady At 6.5%

| Updated: April 6, 2023 11:35

The Reserve Bank of India (RBI) has announced that there will be no change in the repo rate, which is to remain at 6.5 per cent. The RBI monetary policy committee (MPC) announced the first bi-monthly policy for FY24 on April 6. To review the current monetary policy, the MPC led by RBI Governor Shaktikanta Das, met on April 3, 5 and 6.

The RBI governor said the current financial year pointed towards softening of inflation. The war against inflation will continue until there is a durable decline. Experts believed that the RBI will raise key interest rates by 25 basis points (bps) to 6.75 per cent to tackle high inflation.

The US Federal Reserve raised interest rates by 25 basis points in March. The Central Bank indicated its intention to pause further rate hikes due to concerns about the banking sector’s stability. The decision was made in the aftermath of the recent failures of three US banks: Silvergate, Silicon Valley Bank (SVB), and Signature Bank.

The Federal Reserve has been aggressively raising interest rates since March 2022 in an effort to keep inflation under control. Rates have been raised by a total of 4.5%, which has resulted in a sharp rise in interest rates in a variety of industries. But when Silicon Valley Bank ran out of cash and started taking deposits, that was one notable effect of the high rates. 

The country’s growth momentum is supported by high-frequency indicators such as GST collections, automobile sales, fuel consumption, PMI manufacturing and services, which have registered higher annualised growth rates and sequential improvements.

Amid global uncertainties, India’s economy continues to remain stable the tenacity of high inflation and the decline in liquidity surplus in the banking system poses significant challenges.

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