The RBI maintained its key repo rate at 5.5% as expected, with policymakers assessing the effects of recent rate cuts amid global trade uncertainties.
The Reserve Bank of India (RBI) on Wednesday kept its key repo rate unchanged at 5.50%, RBI Governor Sanjay Malhotra announced. The move was widely expected, as policymakers opted to wait and assess the impact of recent rate cuts amid growing global trade uncertainties.
The six-member rate-setting panel held the policy rate with a unanimous vote and decided to continue with a “neutral” stance.
The Monetary Policy Committee (MPC), which met on August 4, 5, and 6, carefully reviewed the latest economic and financial conditions before taking this decision.
The governor said all six members of the MPC voted unanimously to maintain the repo rate under the Liquidity Adjustment Facility at 5.5 per cent.
Sanjay Malhotra said, “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.This comes after the MPC had reduced the repo rate by 50 basis points to 5.5 per cent in the previous policy meeting held in June.
The reason for the earlier rate cut was the easing of inflation. Earlier, he said that both near-term and medium-term inflation levels are now within the RBI’s comfort zone. He also highlighted that food inflation has remained soft, which gives the central bank more flexibility in its decisions.
The article originally appeared on Hindustan Times
