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RBI Keeps Repo Rate Unchanged: Emphasizes India's Economic Resilience

The Reserve Bank of India's (RBI) high-powered monetary policy committee (MPC) has opted for the third consecutive time to maintain the repo rate at 6.5 percent. The repo rate, representing the interest rate at which commercial banks are lent money by the RBI, remains unchanged amidst prevailing economic conditions.

In a press conference held on Thursday, RBI Chief Shaktikanta Das reiterated the unanimous nature of the decision to maintain the policy interest rate. He highlighted the robustness and stability exhibited by the Indian economy, underlining its ascent as the world's fifth-largest economy. Das also recognized India's advantageous position to harness the ongoing transformative shift in the global economy.

While acknowledging the global economy's ongoing challenges stemming from inflation, geopolitical uncertainty, and extreme weather events, Das expressed confidence in India's resilience to external headwinds affecting economic growth. This is the third consecutive instance where the RBI's MPC has opted to leave the repo rate unaltered.

Since February, when the repo rate was elevated from 6.25 percent, it has remained constant at 6.5 percent. The decision holds significance for consumers, as it ensures that loan equated monthly installments (EMIs) will not be affected by the status quo in the repo rate.

To counter inflationary pressures, the RBI has undertaken a series of incremental repo rate hikes, aggregating 250 basis points since May 2022. The government has charged the RBI with the mandate of maintaining retail inflation at 4 percent, with a 2 percent margin on either side.

The six-member MPC comprises three RBI officials and three external experts. In addition to Governor Shaktikanta Das, the committee includes RBI officials Rajiv Ranjan and Michael Debabrata Patra, along with external members Shashanka Bhide, Ashima Goyal, and Jayanth R Varma.

As the RBI continues to assess and navigate the evolving economic landscape, its decisions hold implications for various sectors of the economy. The decision to maintain the repo rate underscores the RBI's cautious approach towards balancing growth and inflationary concerns, aiming to sustain India's economic trajectory in the face of global challenges.

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