RBI repo rate unchanged at 6.5 percent

Reserve Bank of India has kept repo rate unchanged at 6.5 percent in its  bi-monthly monetary policy announced today. The six-member monetary policy committee (MPC) voted by 5:1 majority to keep the repo rate unchanged in its last meeting of the current financial year as retail inflation continues to be above its target of 4 percent. The repo rate is the interest rate at which banks draw funds from RBI to overcome short-term liquidity mismatches. RBI has projected the inflation based on Consumer Price Index at 5.4 percent in the current fiscal and 4.5 percent during the next financial year. RBI has pegged real GDP growth for the next financial year at 7 percent. RBI Governor Shaktikanta Das said, MPC decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. 

The government has mandated the central bank to ensure the retail inflation based on the Consumer Price Index (CPI) remains at 4 per cent with a margin of 2 per cent on either side. The MPC consists of three external members and three officials of the RBI. The external members of the panel are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma. Besides Governor Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).