Repo rate remains unchanged at 6.5% for ninth consecutive time

The Reserve Bank of India’s Monetary Policy Committee on Thursday decided to keep the repo rate unchanged at 6.5% for the ninth time in a row.

The Monetary Policy Committee voted four to two to maintain the policy repo rate at 6.5%, Reserve Bank Governor Shaktikanta Das said on Thursday.

The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee decides on changes to it every two months.

Central banks usually increase key lending rates to control inflation. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers which is expected to help curb prices rise due to high inflation. However, a higher repo rate also means that the borrowers pay more interest on their loans.

The Reserve Bank said on Thursday said its decision to keep the repo rate unchanged was in consonance with its objective of keeping consumer price index inflation to 4% with a margin of 2% above and below that mark, while supporting growth at the same time.

The increase in repo rate was paused in April 2023 after six consecutive hikes aggregating to 250 basis points since May 2022. A basis point is one-hundredth of a percentage point. Basis points are used to describe...

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