Business

Experts expect status quo in interest rates from ongoing RBI monetary policy

The results of the third monetary policy committee meeting of the Reserve Bank of India will be made public on Thursday morning.

RBI typically conducts six bi-monthly meetings in a financial year, where it decides interest rates, money supply, inflation outlook, and various macroeconomic indicators. The ongoing three-day meeting started on Tuesday.

The monetary policy committee of the central bank unanimously decided to maintain the repo rate at 6.5 percent at its previous meeting in early June, as most analysts had predicted. The repo rate was paused by the RBI at its meeting in April as well. The interest rate at which the RBI lends money to other banks is known as the repo rate. The central bank may have decided to again pause the key interest rate due to the ongoing decline in inflation, which is currently at an 18-month low. Many nations, including advanced economies, have concerns about inflation, but India has done a good job of controlling its trajectory.

Barring the April pause, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.

Sagarika Gautam

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