RBI holds key rates steady; focuses on 4% inflation target

RBI key rates: Reserve Bank of India (RBI) has kept its key interest rate stey at 6.50 per cent , aligning with market expectations. This decision marks ninth consecutive meeting where RBI has opted to maintain rate, as part of its ongoing effort to steer inflation towards its 4 per cent target.

Monetary Policy Committee (MPC), consisting of three RBI members and three external experts, reached this decision with four out of six members supporting it. MPC's stance remains at 'withdrawal of accommodation' to support its inflation-targeting goals, with same majority backing this position.

A Reuters poll of 59 economists conducted in late July h predicted RBI would hold rates stey. last change in policy rate occurred in February 2023 when it was raised to 6.50 per cent. Despite a recent increase in annual retail inflation rate to above 5 per cent  due to rising food prices, RBI continues to prioritize inflation control.

Investor sentiment has been influenced by global market developments, including a recent rate hike by Bank of Japan and concerns about a potential US recession. Although Indian equities have performed relatively well, rupee has hit all-time lows, prompting intervention from central bank.

Strong GDP growth, with a projected 7.2 per cent  expansion for fiscal year, supports RBI's focus on inflation management, even amidst global economic uncertainties.

(With Reuters inputs)