RBI MPC Unanimously Holds Repo Rate at 6.50% for Eighth Time
The Reserve Bank of India's Monetary Policy Committee (MPC) decided to keep the key interest rates unchanged, maintaining its 'withdrawal of accommodation' stance.
Source: GNews RBI EconomyThe Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) unanimously voted to keep the repo rate at 6.50% during its latest meeting. This marks the eighth consecutive time the RBI MPC has maintained the status quo on interest rates. The decision was announced by RBI Governor Shaktikanta Das. The MPC also decided by a 4-2 majority to continue with the 'withdrawal of accommodation' stance, aiming to ensure inflation aligns with the target while supporting growth. The RBI projected India's real GDP growth for FY25 at 7.2% and retail inflation at 4.5%. This move reflects the RBI's cautious approach amid global uncertainties and domestic inflation concerns, particularly regarding food prices. The RBI MPC's decision impacts borrowing costs for banks and, consequently, for consumers and businesses across the country.
This decision by the RBI MPC is crucial for aspirants studying Economy for UPSC, SSC, and Banking exams. It directly relates to monetary policy, inflation management, and economic growth, which are core topics in General Awareness and Indian Economy sections. Understanding the MPC's role, its tools like the repo rate, and its stance ('withdrawal of accommodation') is vital for answering questions on central banking functions and their impact on the Indian economy.
- The RBI MPC kept the repo rate unchanged at 6.50%.
- This is the eighth consecutive time the repo rate has been held steady.
- The MPC voted unanimously (6-0) to maintain the repo rate.
- The 'withdrawal of accommodation' stance was retained by a 4-2 majority.
- RBI projects India's real GDP growth for FY25 at 7.2%.
- Retail inflation for FY25 is projected at 4.5% by the RBI.
The MPC is a six-member body of the Reserve Bank of India, responsible for fixing the benchmark interest rate (repo rate) in India. It was constituted in 2016. Three members are from the RBI, and three are external members appointed by the government. Its primary objective is to maintain price stability while keeping in mind the objective of growth.
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks in India. It is a key monetary policy tool used by the RBI to control inflation and manage liquidity in the economy. A higher repo rate makes borrowing more expensive for banks, which in turn can lead to higher lending rates for consumers.
This monetary policy stance indicates that the central bank is reducing the amount of money supply in the economy. It means the RBI is either raising interest rates or keeping them high, and reducing liquidity, to curb inflation. It is a step towards tightening monetary policy, moving away from an accommodative stance which aims to boost growth by lowering rates.
UPSC and SSC often ask about the functions of the RBI, monetary policy tools (repo rate, reverse repo rate), and the composition/objectives of the MPC. Banking exams frequently test current rates and the latest policy stance.
Remember 'Repo' as 'RePurchase Option' for banks to get funds from RBI, currently at 6.50% for 8 meetings straight.
Frequently Asked Questions
What is the current repo rate in India as decided by the RBI MPC?
The current repo rate in India, as decided by the RBI's Monetary Policy Committee, is 6.50%. This rate has been maintained for the eighth consecutive time, reflecting the central bank's cautious approach to economic conditions.
What is the 'withdrawal of accommodation' stance adopted by the RBI?
The 'withdrawal of accommodation' stance means the RBI is aiming to reduce the money supply in the economy. This is typically done by keeping interest rates high or raising them, and reducing liquidity, to control inflation. It signals a move towards tightening monetary policy.
How often does the RBI's Monetary Policy Committee meet?
The RBI's Monetary Policy Committee (MPC) is mandated to meet at least four times a year. However, it typically meets six times a year, every two months, to review the economic situation and decide on monetary policy.