India’s central bank, the Reserve Bank of India, has announced that it will maintain its policy repo rate at 6.50%. The monetary-policy committee made this decision unanimously in light of the recent slowdown in domestic inflation.
Governor Shaktikanta Das acknowledged that there are still inflationary risks, such as the volatility of international food and energy prices, geopolitical tensions, and weather-related uncertainties. Despite the moderation in inflation, Das emphasized that more needs to be done to sustain India’s growth momentum.
The central bank also affirmed its focus on the withdrawal of accommodation, indicating that it remains committed to its current policy stance.
A survey conducted among nine economists by The Wall Street Journal accurately predicted that the Indian central bank would keep its policy rate unchanged.
Governor Das provided further insights into the central bank’s projections. The Reserve Bank of India expects annual inflation to reach 5.4% by the end of March 2024, revising its previous forecast of 5.1%. Additionally, the Indian economy is projected to expand by 6.5% in real terms for the current fiscal year, maintaining the previous estimate.
In June, India’s consumer-price index recorded a year-on-year increase of 4.8%, compared to a 4.25% rise in May and a 6.5% surge in January. The Reserve Bank of India aims to keep inflation within a target range of 2% to 6%.