RBI keeps repo rate unchanged contrary to market and economist expectations

RBI Governor Shaktikanta Das has announced that the Indian central bank will not hike its lending rate (repo rate) contrary to what market watchers and economists were expecting. A CNBC-TV18 poll had seen 90 percent of economists predict a 25 bps rate hike. Thus, the lending rate stands at 6.5 percent as announced on Feb 8 in the previous policy.

Governor Das reasoned that the global economy has seen an uptick in recent times, as well as inflation, has started to moderate.

The Monetary Policy Committee also voted by a 5:6 majority to remain focussed on the withdrawal of accommodation to ensure inflation aligns with the target while focussing on growth.

The market has reacted positively to this news and as seen in the graph below recovered from its lows. At the time of publishing the Nifty50 has turned positive and is 30 points in the green.

 

For the same period, the inflation projection has been kept at 5.2 percent.