Monetary Policy 2023: Central Bank keeps repo rate at 6.5%

The Reserve Bank of India (RBI) held the repo rates constant at 6.5 percent on Thursday, defying widespread media rumours. After six straight policies of rate increases, the central bank's Monetary Policy Committee (MPC) chose to halt.

Governor Shaktikanta Das stated that the RBI has maintained the repo rate at 6.5% with the readiness to act should the circumstances warrant. He made this statement while announcing the three-day meeting of the Monetary Policy Committee.

According to RBI Governor Shaktikanta Das on Thursday, five out of the six members of the MPC opted to continue concentrating on the withdrawal of accommodation to ensure inflation complies with objective while focusing on growth.

The RBI's Monetary Policy Committee met on April 3, April 5, and April 6 to start the first bimonthly review of the new fiscal year for the central bank. The central bank's monetary policy is reviewed six times every two months over the course of a year. Out-of-cycle reviews are another option, when the central bank organises additional meetings as necessary.

During its most recent meeting in early February, the RBI's Monetary Policy Committee (MPC) agreed to raise the repo rate by 25 basis points, to 6.5 percent, in order to curb inflation. The repo rate-the interest rate at which the RBI lends money to banks-has gone up by 250 basis points since May 2022. Raising interest rates is a monetary policy tool that often reduces economic demand and lowers inflation. Raising interest rates is a monetary policy tool that often reduces economic demand and lowers inflation.