Repo rate unchanged: Here’s why RBI MPC took a pause this time
RBI Governor Shaktikanta Das-led Monetary Policy Committee decided to hold the key lending rate and maintain the stance of policy at 'withdrawal of accommodation'.
The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on April 6 decided to maintain the status quo on the repo rate at 6.50 per cent. Other policy rates were also kept unchanged.
“The monetary policy committee decided unanimously to keep the policy repo rate unchanged at 6.5 per cent in this meeting of MPC with readiness to act should the situation so warrant,” said RBI governor Shaktikanta Das.
The governor also highlighted some of the reasons behind the decision to pause the rate hike for this time.
“The MPC decided to keep the policy rate unchanged to assess the progress made so far while closely monitoring and evolving the inflation outlook,” said Das during his address. He further stressed the fact that while the recent high-frequency indicators suggest some improvement in global economic activity, the outlook is now tempered by additional downside risk from financial stability concerns.
“Headline inflation is moderating but remains well above the target. These developments have led to heightened volatility in global financial markets as reflected in sizeable two-way movements in bond yields,” asserted Das.
Another major reason behind the rate hike pause for this time was the weighted average credit rating (WACR). Das mentioned that there have been repeated rate hikes since last May and those have been transmitted to WACR. WACR relates to the weighted average rating regarding all bonds in a bond fund. This rating procedure provides investors with an idea of a fund's credit quality. It also helps to identify the overall risk involved with a bond portfolio.
Further, the governor said that the MPC decided to maintain a 'withdrawal of accommodation' stance.
“Overall inflation is above the target and given its current level present policy, the rate can still be regarded as accommodative. Hence the MPC decided to remain focused on the withdrawal of accommodation,” said Das.
Also Read: RBI MPC meeting Live | Zee Business
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
03:55 PM IST