MUMBAI – As expected by the market, the Reserve Bank of India (RBI) announced on Thursday that it would keep the repo rate unchanged at 6.50%. The central bank also maintained its policy stance of focusing on the gradual withdrawal of accommodation. The decision to pause rate hikes was supported unanimously by the Monetary Policy Committee (MPC), with 5 out of 6 members favoring the retention of the policy stance.
Following the announcement, the equity markets remained relatively stable. Both the Sensex and Nifty 50 experienced a modest increase of 0.25%, reaching 63,301.39 points and 18,774.10 points, respectively. The Nifty Bank index also saw a slight uptick of 0.2%, reaching 44,382.15 points.
While monetary policy tightening has slowed down globally in recent months, uncertainties persist regarding the future trajectory of such measures, according to RBI Governor Shaktikanta Das. On the domestic front, macroeconomic fundamentals are strengthening, but concerns remain regarding the upcoming monsoon season and the potential impact of El Nino conditions.
In light of these uncertainties, Das emphasized the need for the central bank to remain vigilant and adaptable to the evolving situation, thus justifying the decision to maintain the current policy stance.