Reserve Bank of India maintains interest rates at 6.5% to curb inflation

The Reserve Bank of India (RBI) held its key interest rate steady on Friday in line with market expectations, as the country's robust economic growth continues to allow a focus on curbing inflation to its medium-term target of 4 per cent.

The Monetary Policy Committee (MPC), comprising three RBI members and three external members, decided to keep the repo rate unchanged at 6.50 per cent for the eighth consecutive policy meeting.

Governor Shaktikanta Das, in his statement, revealed that four out of six MPC members voted in favour of maintaining the repo rate, stressing the central bank's commitment to ensuring inflation aligns with the target.

In a Reuters poll, all but one of 72 economists had anticipated the MPC to maintain the repo rate at 6.50 per cent. Most economists view this rate as the peak of the current monetary cycle.

The committee, with a majority of four out of six votes, also opted to retain the 'withdrawal of accommodation' stance.

The last rate change occurred in February 2023, when the policy rate was raised to 6.50 per cent. While annual retail inflation slightly eased to 4.83 per cent in April from 4.85 per cent in March, it remained above the MPC's target.

Official data released last week showed that the economy expanded at a faster-than-expected pace of 7.8 per cent in the March quarter, leading to a full-year growth of 8.2 per cent for the South Asian nation.

(With Reuters inputs.)