RBI announces monetary policy, keeps repo rate on pause at 6.5pc

RBI Thursday announced its second bi-monthly policy of this fiscal and as expected the
apex bank preferred to maintain status quo by keeping the key rates unchanged.
Announcing the policy review, RBI Governor Shaktikant Das said the Monetary Policy
Committee decided to keep the policy repo rate unchanged at 6.5%, consequently, the
Standing Deposit Facility (SDF rate) remains at 6.25% and the marginal standing facility
and the bank rates stand at 6.75%.
The MPC also decided by a majority of five out of six members to remain focused on the
withdrawal of accommodation to ensure that inflation progressively aligns with the target
while supporting growth.
RBI Governor said that in India Consumer Price Inflation eased during March-April 2023
and moved into the tolerance band, declining from 6.7% in 2022-23.
Headline inflation, however, is still above the target as per the latest data and is
expected to remain so according to our projections for 2023-24.
He said that as per our assessment, inflation will remain above 4% throughout 2023-24.
Das said that considering all factors and assuming a normal monsoon, CPI headline
inflation is projected at 5.1% for 2023-24.
The RBI governor also spoke about the withdrawal of Rs. 2000/- note. He said, since the
third week of May, the decline in currency in circulation and pick up in govt spending
have expanded system liquidity. This has got further augmented due to the RBI's market
operations and the deposit of Rs 2000 banknotes in the banks.
The central bank also retained the GDP growth projection for the current fiscal at 6.5 per
cent on the back of supportive domestic demand conditions.