MPC unanimously decided to keep the policy rate unchanged at 6.50 per cent for the second time. The RBI Governor Shaktikanta Das on Thursday also added that the MSF rate and bank rate will also be unchanged at 6.75 per cent. SDF rate will continue to be at 6.25 per cent.
The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022.
The MPC meeting took place against the backdrop of consumer price-based (CPI) inflation declining to a 18-month low of 4.7 per cent in April. The Reserve Bank governor recently indicated that the May print would be lower than the April numbers. The CPI for May is scheduled to be announced on June 12.
RBI Governor Das also said that the headline inflation is expected to remain above 4 per cent through the financial year 2024 and the projected inflation for financial year 2024 is just above 5 per cent. The inflation projection for financial year 2024 has been lowered to 5.1 per cent from 5.2 per cent.
He said retail inflation has been below the upper band of 6 per cent for the last two years.