RBI monetary policy: Contrary to widespread media predictions, the Reserve Bank of India (RBI) held repo rates constant at 6.5 percent on Thursday.
The central bank’s Monetary Policy Committee (MPC) chose to halt after a rate hike in the previous six consecutive policies.
Governor Shaktikanta Das stated during the announcement of the three-day meeting of the Monetary Policy Committee that the RBI has kept the repo rate constant at 6.5% and is ready to act if the circumstances warrant it.
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The Reserve Bank of India issued its bimonthly monetary policy on Thursday, keeping the repo rate constant at 6.50 percent. The RBI’s Monetary Policy Committee (MPC) unanimously decided to maintain the repo rate at 6.50 percent, said governor Shaktikanta Das in releasing the first monetary policy statement of the fiscal year.
#RBIPolicy | RBI raises FY24 #GDP growth forecast to 6.5% from 6.4% with Q1 and Q2 fortecasts remain unchganged at 7.8% and 6.2% respectively while Q3 and Q4 projections are increased to 6.1% and 5.9% respectoively pic.twitter.com/2tzRmVa5Re
— CNBC-TV18 (@CNBCTV18Live) April 6, 2023
The RBI’s Monetary Policy Committee met on April 3, 4, and 6 to begin the central bank’s first bimonthly review of the new fiscal year. A year is divided into six biweekly reviews of monetary policy by the central bank. There are also out-of-cycle reviews, in which the central bank holds extra sessions in emergency situations.
RBI’s Monetary Policy: Nifty, Stock market impact
Around the same time, the rate-sensitive Nifty Bank index rose 136 points, or 0.37 percent, to 41,135 with State Bank of India (SBI) and Punjab National Bank (PNB) leading the gains, up 1.27 percent and 1.18 percent, respectively. The Nifty Financial Services index rose 0.37 percent in response to the RBI MPC decision.
Except for the Nifty FMCG and Nifty Consumer Durables, all sectoral indexes traded in green. The Nifty PSU Bank index gained the most, 1.21 percent.
At its most recent meeting in early February, the RBI’s Monetary Policy Committee (MPC) decided to raise the repo rate by 25 basis points, to 6.5 percent, in order to manage inflation. The RBI has boosted the repo rate (the interest rate at which it lends to banks) by 250 basis points since May 2022. Raising interest rates is a monetary policy tool that is typically used to reduce economic demand and lower inflation.