RBI Extends Pause — Repo Rate Remains Unchanged At 6.5 Per Cent

The Reserve Bank of India (RBI) has announced that it will maintain the key benchmark policy rate at 6.5 per cent.

This decision was made during the bi-monthly monetary policy meeting on Thursday (8 June).

RBI Governor Shaktikanta Das stated that the Monetary Policy Committee (MPC) has unanimously agreed to keep the repo rate unchanged.

Along with this, the standing deposit facility (SDF rate) will remain at 6.25 per cent, and the marginal standing facility and bank rates will stand at 6.75 per cent.

Das highlighted that the MPC has also decided to remain focused on the withdrawal of accommodation.

This will ensure that inflation progressively aligns with the target while supporting growth, based on the inflation projection which has been marginally reduced to 5.1 per cent from the previous estimate of 5.2 per cent for the current financial year.

Since May 2022, the RBI has raised the repo rate by a total of 250 basis points to combat inflation before settling on the previous meeting's pause.

With India's retail inflation dropping to an 18-month low of 4.70 per cent in April, well below the RBI's upper tolerance level, economists hope that the forthcoming readings will be below the 6 per cent threshold, signalling a sustained pause in the rate cycle.

Das added during the announcement that the global economy is sustaining the momentum gained in the preceding quarter, despite elevated but moderating inflation, tighter financial conditions, banking sector stress, and geopolitical conflicts still being persistent.

He emphasised that the RBI's objective remained the same and that the governing body would continuously monitor and review the evolving global and domestic situations.