The six-member Monetary Policy Committee (MPC) on Thursday voted unanimously to keep the policy repo rate unchanged at 6.50 per cent in the backdrop of retail inflation for April 2023 easing to a 19-month low and FY23 GDP growth accelerating more than the earlier estimates.

The MPC also decided by a majority of five out of six members “to remain focussed on withdrawal of accommodation” stance.

Achala Jethmalani, Economist, RBL Bank Achala Jethmalani, Economist, RBL Bank
Achala Jethmalani, Economist, RBL Bank  Achala Jethmalani, Economist, RBL Bank  
Rajani Sinha, Chief Economist, CareEdge
Rajani Sinha, Chief Economist, CareEdge  Rajani Sinha, Chief Economist, CareEdge  

This is the second time in as many meetings that the MPC preferred a status quo on the policy repo rate. The policy repo rate is the interest rate that banks pay RBI for drawing funds to overcome short-term liquidity mismatches.

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Since May 2022, when the tightening cycle began, the repo rate has cumulatively been raised by 250 basis points, from 4 per cent to 6.50 per cent.

Governor Shaktikanta Das had characterised the last monetary policy decision as being “a pause, not a pivot.”

CPI (consumer price index) inflation in April 2023 at 4.7 per cent was at an 18-month low. This is the second consecutive month that CPI remained within MPC’s upper tolerance level of 6 per cent. India’s economy grew by 7.2 per cent in FY23 as against the NSO’s earlier estimate of 7 per cent.