Reserve Bank of India (RBI) governor Shaktikanta Das announced on Thursday that the RBI’s monetary policy committee (MPC) unanimously decided to keep the repo rate unchanged at 6.5% for the third time. The decision was made during the three-day bi-monthly policy review meeting between Tuesday to Thursday.

The MPC kept the standing deposit facility (SDF) and the marginal standing facility (MSF) rates unchanged at 6.25% and 6.75, respectively. Further, the incremental cash reserve ratio (I-CRR) for scheduled banks was kept at 10% due to increased net demand and time liabilities (NDTL) between May 19 and July 28.

Due to soaring food inflation, including rising vegetable, cereal and pulse prices, CPI inflation increased again and reached 4.81% in June, from a 25-month low of 4.25% in May. Several economists and experts expected the headline inflation number to reach 6-6.5%. 

During the announcement, Das said the MPC has decided to keep the policy stance unchanged at ‘withdrawal of accommodation’ with a five-to-one majority. This comes as the monetary transmission is still underway, and headline inflation remains higher than the 4% target.

The RBI raised its CPI inflation forecast for 2023-24 to 5.4% from 5.1% earlier, with the second quarter inflation forecast crossing 6.2%, considering the various domestic and global factors. However, the GDP forecast for FY24 has been retained at 6.5%. The MPC projects real GDP growth for Q1 at 8%, Q2 at 6.5%, Q3 at 6%, and Q4 at 5.7%.