The Reserve Bank of India on Thursday expectedly kept the benchmark interest rate and stance unchanged for the ninth straight policy meeting, saying it cannot afford to look through persisting high food inflation and has to remain vigilant to prevent spillover.
Retaining its unambiguous focus on inflation, the Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the benchmark repurchase or repo rate unchanged at 6.50 per cent.
Four out of the six members of MPC voted in favour of the rate decision. The panel, whose four-year term ends in October, also decided to retain a policy stance at “withdrawal of accommodation” to aid MPC’s focus on bringing inflation towards its 4 per cent target.
Inflation climbed to 5.08 per cent in June, primarily driven by the food component.
RBI Governor Shaktikanta Das said food inflation remains “stubbornly” high.
“Without price stability, high growth cannot be sustained,” he said, adding that “monetary policy must continue to be disinflationary”.
He said the MPC could have looked through high food inflation if it was transitory. “But in an environment of persisting high food inflation, as we are experiencing now, the MPC cannot afford to do so. It has to remain vigilant to prevent spillovers or second round effects from persistent food inflation and preserve the gains made so far in monetary policy credibility.”
The MPC last revised interest rate in February 2023, when it was hiked to 6.5 per cent.
