The Reserve Bank of India (RBI) opted to keep its benchmark repo rate steady at 6.5% during the final monetary policy committee meeting of the year, despite concerns over slowing economic growth. The decision reflects the central bank’s cautious stance as it continues to prioritize managing inflation risks.
This marks the RBI’s ninth consecutive pause on rate hikes after raising the repo rate by 250 basis points between May 2022 and February 2023. A basis point equals one-hundredth of a percentage point.
The decision comes amid calls from the government to reduce borrowing costs and boost growth. Union Commerce Minister Piyush Goyal recently criticized the consideration of food inflation in rate decisions, stating on November 14, “I firmly believe the RBI should lower interest rates. Growth requires additional support.”
Echoing similar concerns, Finance Minister Nirmala Sitharaman highlighted the need for affordable lending to spur industrial expansion. “As we encourage industries to scale up and enhance capacities, bank interest rates must become more competitive,” she said on November 18.
The RBI’s move to keep rates unchanged underscores the balancing act between fostering economic growth and maintaining price stability, a challenge that is likely to persist in the near term.
