RBI Keeps Key Interest Rate Unchanged as Inflation Remains above Target

The Reserve Bank of India (RBI) opted to maintain its key interest rate unchanged on Friday, aligning with market expectations given the backdrop of sustained economic growth and a concerted effort to steer inflation towards the medium-term goal of 4%.

The Monetary Policy Committee (MPC), comprising three RBI officials and three external members, upheld the repo rate at 6.50% for the eighth consecutive policy meeting. A Reuters survey of 72 economists revealed a consensus that the MPC would retain the repo rate at 6.50%, with many experts viewing this rate as the pinnacle of the ongoing monetary cycle.

The last adjustment to interest rates by the MPC occurred in February 2023, when the policy rate was elevated to 6.50%. Despite a marginal dip in annual retail inflation to 4.83% in April from 4.85% in March, the figure remains notably above the MPC’s targeted inflation rate.