The Reserve Bank of India kept its repo rate unchanged at 6.25 percent for a third consecutive policy meeting on Thursday as it continues to guard against any potential flare-up in inflation and an uncertain global economic environment.
The RBI also announced it would raise the reverse repo rate by 25 basis points to 6.00 percent, narrowing the gap between the repo and the reverse repo to 25 bps.
All 60 economists polled by Reuters had predicted the RBI’s monetary policy committee would keep the repo rate at 6.25 percent, where it’s been since October. The meeting was the first of four so far with panel-made decisions where forecasters correctly predicted the outcome.
The MPC’s vote was again 6-0, just like the previous meetings, as the panel continues to exhibit a united front in pursuing its objective of keeping inflation at around 4 percent, with elbow room of 2 percentage points at either side.
The RBI, which unexpectedly changed its policy stance to “neutral” from “accommodative” at its last review in February, reasserted its concerns about inflation. This comes in spite of calls for the RBI to do more to aid an economy growing at less than the 8 percent needed to create full employment.
“The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 percent, while supporting growth,” said the RBI in the statement.