The Reserve Bank of India (RBI) confirms repo rate to stay at 6.5 per cent.
The repo rate is the key lending rate through which the RBI lends money to commercial banks against government securities.
The RBI had hiked rates six times in a row before it decided to pause.
On 6 April, the RBI monetary policy committee headed by Governor Shaktikanta Das concluded a three-day meeting with the announcement of the first bi-monthly policy for fiscal year (FY) 2024 after reviewing the current monetary policy on 3, 5, and 6 April.
The RBI was expected by many to increase key interest rates by 25 basis points (bps) to 6.75 per cent, due to high inflation remaining persistently above their 6 per cent comfort zone.
The current pause doesn't say anything about the future, the RBI Governor said. "Monetary Policy Committee will not hesitate to take any action in future," Das said.
The United States Federal Reserve raised interest rates by 25 basis points in March, but announced that it would pause future hikes. This was in response to the collapse of Silvergate, Silicon Valley Bank, and Signature Bank, which had raised concerns about the banking sector's stability.
Nuvama's report states that India's economy remains stable and outpaces most economies amidst global uncertainties.
Various high-frequency indicators, such as fuel consumption, automobile sales, PMI (purchasing managers' index) manufacturing and services, and GST (goods and services tax) collections, continue to support the country's growth momentum, recording higher annualised growth rates and sequential improvements.
India's stable economy amid global uncertainties faces challenges of high inflation and decreased liquidity surplus in the banking system.
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