The Reserve Bank of India (RBI) opted to hold the policy repo rate constant at 6.5 percent while also withdrawing the accommodative stance to combat inflation. The decision was made with a 4:2 majority, according to RBI governor Shaktikanta Das during a news conference following the monetary policy committee (MPC) meeting.
"The MPC also decided to remain focused on the withdrawal of accommodation to ensure anchoring of inflation expectations and fuller policy transmission," the RBI governor stated at the post-MPC news conference.
Furthermore, the central bank left the standing deposit facility (SDF) and marginal standing facility (MSF) rates unchanged. While the SDF remains at 6.25 percent, the MSF and bank rates stay at 6.75 percent.
This is the ninth time in a row that the RBI has opted to maintain the repo rate steady. He also indicated that the central bank is dedicated to achieving the 4% inflation objective on a long-term basis. The central bank anticipated inflation to stay at 4.5 per cent in the current fiscal assuming normal monsoon with risks evenly balanced, Das added.
He said that food inflation remained high and might derail the path to deflation. "While the MPC took note of the disinflation achieved so far without hurting growth, it remains vigilant to any upside risks to inflation, particularly from food inflation, which could possibly derail the path of disinflation," he stated.
Das additionally stated CPI headline inflation moderated in March-April and that vegetable prices are experiencing an upswing. He stated that the second quarter of the current fiscal year is expected to witness some reduction in retail inflation.
Shaktikanta Das noted that food inflation should be strictly monitored. The RBI MPC meeting was place on June 5-7. This was the first meeting of the RBI's monetary policy committee following the 2024 Lok Sabha election results.
