RBI retains its focus on the withdrawal of accommodation while maintaining the repo rate

8 Jun 2023 , 12:11 PM

 The Reserve Bank of India kept the repo rate at 6.50% on Thursday, as anticipated by the market.

Additionally, the central bank kept its focus on ‘withdrawal of accommodation’ in its policy position. The MPC panel voted unanimously to halt rate increases, while 5 of the panel’s 6 members supported the decision to maintain the current course of action.

The policy conclusion had little impact on the equity markets. At 63,301.39 points and 18,774.10 points, respectively, the Sensex and Nifty 50 were both up 0.25%. At 44,382.15 points, the Nifty Bank index was 0.2% higher.

Although the rate of monetary policy tightening has moderated in recent months all over the world, uncertainty still exists on the trajectory of policy tightening, according to RBI Governor Shaktikanta Das.

On the domestic front, macroeconomic fundamentals are improving, although the monsoon outlook and possible El Nino conditions’ effects are still uncertain.

In order to maintain its policy position, the central bank must therefore continue to monitor the changing scenario, according to Das.

According to him, the MPC opted to keep the current policy course in order to boost growth while ensuring that inflation gradually converges to the target.

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