In a significant announcement during the Monetary Policy Committee (MPC) meeting on Wednesday, Reserve Bank of India (RBI) Governor Shaktikanta Das confirmed that the central bank will keep the policy repo rate unchanged at 6.5 percent for the tenth consecutive time. This decision was reached by a majority vote of 5 out of 6 MPC members.
The standing deposit facility (SDF) rate remains steady at 6.25 percent, while both the marginal standing facility (MSF) rate and the bank rate are maintained at 6.75 percent.
Governor Das emphasized a notable shift in the RBI's monetary policy, moving to a neutral approach. He stated, "The MPC has decided to change the stance of monetary policy to neutral while remaining unambiguously focused on a durable alignment of inflation with the target, alongside supporting growth." This neutral stance reflects the RBI's efforts to balance inflationary pressures with the need to support economic growth.
The central bank is committed to achieving stable inflation rates aligned with its long-term targets while fostering sustainable economic expansion. Amid persistent inflation risks and global economic uncertainties, the RBI's flexible approach will allow it to respond effectively to both inflationary trends and growth needs.
The MPC meeting, which commenced on October 7, garnered significant attention as the RBI has maintained the repo rate at 6.50 percent across the past nine meetings. Key factors under review include ongoing inflationary pressures, especially in food prices, and global economic uncertainties.
According to data from the Ministry of Statistics & Programme Implementation, while All India Consumer Price Index (CPI) inflation eased to 3.65 percent in August—within the RBI's 2-6 percent target range—food inflation remains elevated at 5.65 percent, surpassing the central bank's medium-term target of 4 percent. Additionally, rising global crude oil prices, influenced by geopolitical tensions in West Asia, have further intensified inflationary concerns.
Despite these challenges, the RBI is focused on fostering economic recovery in the aftermath of the pandemic while closely monitoring inflationary trends.
