MUMBAI: The Indian central bank’s key lending rate was held steady on Friday with inflation control remaining a major focus amid expectations of a spike in food prices in coming months and better than expected economic growth.
The six-member monetary policy committee (MPC), consisting of three RBI and three external members, kept the repo rate unchanged at 6.50% in line with the unanimous consensus in a Reuters poll.
The vote on the repo rate decision was also unanimous. Monetary policy will remain actively disinflationary, Reserve Bank of India (RBI) Governor Shaktikanta Das said.
The RBI also maintained its policy stance of “withdrawal of accommodation” to ensure inflation progressively aligns with the committee’s target while remaining supportive of economic growth.
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The RBI had raised the repo rate by a total 250 basis points (bps) since May 2022 in efforts to cool surging inflation, which dropped to a four-month low of 4.87% in October, but is expected to remain above the RBI’s 4% medium-term target for some time.
India’s economy grew 7.6% in the July-September quarter, much faster than the polled median of 6.8% and RBI’s estimate of 6.5%, helped by government spending and manufacturing, raising bets that Asia’s third-largest economy will outperform its own estimates for the full year.
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