Wed Oct 09 06:30:46 UTC 2024: ## RBI Holds Key Interest Rates Steady for the Tenth Time, Maintaining Status Quo
The Reserve Bank of India (RBI) has once again maintained the status quo on key interest rates, marking the tenth consecutive time the repo rate has remained unchanged. The repo rate, which is the rate at which commercial banks borrow from RBI, will continue to stand at 6.5 percent.
RBI Governor Shaktikanta Das attributed this decision to a combination of factors, including the ongoing geopolitical tensions in West Asia, which pose a threat of rising inflation. While core inflation is under control, he highlighted the rising food inflation as a key concern.
The decision comes despite calls for easing interest rates from the government. While retail inflation has been in a declining trend, hitting a five-year low in July and August, the government has urged the RBI to consider the retail inflation figure without including food prices. However, experts like Raghuram Rajan have warned against this move, arguing it could erode public trust in the RBI’s ability to effectively control inflation.
The RBI’s Monetary Policy Committee (MPC) met for three days to assess the economic situation and decide on the interest rate policy. The MPC also announced an increase in the UPI Lite wallet limit from Rs. 2000 to Rs. 5000, and a similar increase in the limit for IVR-based transactions under “UPI 123Pay” from Rs. 5000 to Rs. 10000.
The RBI expects the GDP growth rate to be 7.2 percent in FY25, with the real GDP growth in the first quarter of FY24 at 6.7 percent.
The upcoming December MPC meeting will be crucial, with some experts predicting a possible rate reduction if economic conditions improve further.
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