Wed Oct 09 01:22:11 UTC 2024: ## RBI Holds Interest Rates Steady for 10th Consecutive Time

**Mumbai, October 26, 2023:** The Reserve Bank of India (RBI) on Wednesday announced its decision to keep interest rates unchanged for the 10th consecutive time, maintaining the repo rate at 6.5%. This means loan interest rates and EMI payments will remain unaffected for the time being.

The decision was announced by RBI Governor Shaktikanta Das after a meeting of the Monetary Policy Committee (MPC), which takes place every two months. The MPC had last raised interest rates by 0.25% to 6.5% in February 2023.

“We believe the current macroeconomic parameters are balanced,” said Governor Das, highlighting the bank’s confidence in the stability of the Indian economy.

The RBI has increased interest rates by a total of 1.10% over five meetings since 2020, aiming to combat inflationary pressures. In 2020, during the COVID-19 pandemic, the bank had reduced interest rates twice, each by 0.40%.

While acknowledging the rise in retail inflation in September, Governor Das emphasized that the RBI remains committed to keeping inflation within its target range of 2% to 6%. He also projected that the GDP growth rate for the fiscal year 2025 could reach 7.2%.

The RBI’s decision comes after the US Federal Reserve cut interest rates by 0.5% on September 18th, bringing them down to between 4.75% and 5.25%. The US is the world’s largest economy, and its monetary policy decisions often have significant global repercussions.

The RBI’s decision to maintain the repo rate reflects its assessment of the current economic climate. The bank’s primary tool in controlling inflation is the policy rate. When inflation is high, raising the policy rate makes borrowing more expensive, slowing down economic activity and ultimately curbing inflation. Conversely, lowering the policy rate can stimulate economic growth.

**Inflation Highlights:**

* Retail inflation rose to 3.65% in August, up from 3.54% in July, primarily driven by rising vegetable prices.
* Wholesale inflation fell to 1.31% in August, the lowest in four months, indicating a softening of price pressures in the supply chain.

**Investing Implications:**

Inflation has a direct impact on purchasing power. Investors should factor in inflation when making investment decisions to protect the value of their savings.

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