Mumbai, 06 Dec (Commoditiescontrol): The Reserve Bank of India (RBI) decided to maintain its key interest rate unchanged on Friday, citing ongoing concerns over elevated inflation. This decision came as a disappointment to investors who had anticipated a rate cut following a significant slowdown in economic growth during the July-September quarter.
The RBI's Monetary Policy Committee (MPC), comprising three internal and three external members, held the repo rate steady at 6.50% for the eleventh consecutive policy meeting. Four out of the six members of the MPC voted to keep rates unchanged. Additionally, the committee reaffirmed its "neutral" stance on policy, signaling no immediate moves toward tightening or loosening monetary conditions.
RBI Governor Shaktikanta Das emphasized the importance of price stability, stating that it directly affects people's purchasing power. Despite the slowdown in the economy, Das expressed confidence in the resilience of economic growth, pointing out that the domestic conditions remain on a balanced path, even amid the recent growth and inflation setbacks.
India’s annual retail inflation had surged to 6.21% in October, exceeding the RBI’s tolerance band for the first time in over a year. Meanwhile, the country’s GDP growth slowed to 5.4% in the July-September quarter, marking its weakest performance in seven quarters.
The market reacted cautiously to the RBI's decision. India’s benchmark 10-year bond yield rose by 2 basis points to 6.7039%, while the rupee remained largely unchanged at 84.6650 against the U.S. dollar. The equity indexes, however, extended their losses in the wake of the announcement.
With the key interest rate held steady, investors are now closely monitoring any potential moves by the RBI to ease the liquidity deficit in the banking system, which could provide relief and help lower market interest rates in the near future.
(By Commoditiescontrol Bureau: 09820130172)
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