The unabated pressure created by high food prices made the RBI Governor, Shaktikanta Das, leave the repo rate unchanged at 6.5% today, even as a moderation in core inflation and a decline in global borrowing rates prompted the central bank to shift its policy stance to neutral.
The Monetary Policy Committee-in which three new external members joined the meeting for the first time-conducted a meeting on October 7, 8 and 9 and took into consideration the recent macroeconomic and financial conditions. Five out of six members voted a majority of the committee for a status quo in policy repo rate.
The repo rate, or the key interest rate at which the Reserve Bank of India lends to commercial banks, has remained unchanged now for a tenth straight MPC meeting in a row. This move is in tandem with the global trend of rate cuts. Even the US Federal Reserve had recently cut interest rates to prop up growth.
The MPC thus, targets to keep Consumer Price Index or retail inflation close to target of 4% and a variation leeway of 2% on either side. Also, over the last few months, the inflation has stayed with the comfort zone of the RBI, giving a reason to keep the rate unchanged.
