The Reserve Bank of India (RBI) decided to maintain its key repo rate at 5.50%, Governor Sanjay Malhotra announced on Wednesday. This decision was widely anticipated, with policymakers choosing to observe the effects of the recent rate reductions amid uncertainties in global trade.
The Monetary Policy Committee (MPC) comprises of sex members. They met on August 4, 5, and 6 to discuss the newest economic and financial conditions of the country. Following a thorough review, the committee unanimously voted to retain the current policy rate and stick to a ‘neutral’ stance.
“All six members of the MPC voted unanimously to keep the policy record under the Liquidity Adjustment Facility unchanged at 5.5 per cent,” said Malhotra.
He further added, “After a detailed assessment of the evolving macroeconomic and financial developments and outlook, the MPC voted unanimously to keep the policy record under the Liquidity Adjustment Facility unchanged at 5.5 per cent.”
In the previous policy meeting held in June, the MPC had reduced the repo rate by 50 basis points, bringing it down to 5.5%. This move was driven by a decline in inflation.
Malhotra also noted that inflation levels, both in the near and medium term, are currently within the RBI’s target range. He emphasized that “food inflation has remained soft,” which offers the central bank greater flexibility in policy decisions.
