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The Reserve Bank of India (RBI) has kept its key lending rate unchanged for the 11th consecutive time citing high inflation and lowered the growth target for the current financial year.
The six-member Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.5 per cent by a 4:2 majority, announced RBI Governor Shaktikanta Das this morning. An unchanged repo rate means the loan interest rates too are likely to remain unchanged.
This came as a disappointment for investors who have been looking for a rate cut after a sharp slowdown in the July-September quarter. The RBI paused the rate increase cycle in April 2023, after six straight rate hikes of 250 basis points since May 2022.
The MPC, which meets every two months, lowered the growth target for this fiscal to 6.6% from 7.3% in the July-September quarter. The Q2 growth turned out to be 5.4%, lower than the projected figure.
Inflation surged above the 6% tolerance level in October, the RBI governor said, and that food inflation will start easing in the January-March quarter. The MPC, he said, believes that only with durable price stability can strong foundations be secured for high growth.
Mr Das said global economy has shown unusual resilience in 2024.
Supply chain pressures eased in the last two months, he said, noting that rural demand is trending upwards while urban demand shows some moderation on high base.