Overtightening & Fears Of Slower Growth Weigh On RBI

The Reserve Bank of India on Thursday hit the pause button and decided to keep the key benchmark policy rate at 6.5 per cent even as inflation is trending above its tolerance level. The rate hike has been paused after six consecutive rate increases aggregating to 250 basis points since May 2022. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee will not hesitate to take action in the future. The policy stance has been maintained as “withdrawal of accommodation”. The central bank has also kept the standing deposit facility rate, marginal standing facility and bank rates unchanged at 6.25 per cent and 6.75 per cent respectively. The central bank has projected inflation to drop to 5.2 per cent for 2023-24. The central bank has also projected GDP growth for 2022-23 at 7 per cent and 6.5 per cent for 2023-24.