Reserve Bank of India keeps interest rates unchanged

The Reserve Bank of India kept its policy rate unchanged, taking into account the inflation outlook. The bank also revised its 2024 inflation forecast upwards. The Reserve Bank of India kept its policy rate unchanged for the third consecutive meeting, while signaling that it was ready to take action if food prices put upward pressure on inflation. The bank kept its policy rate at 6.50 percent. The decision was taken unanimously. This was also the expectation of economists who participated in the Bloomberg survey. The bank also decided to maintain its policy stance focused on “withdrawing incentives” implemented in April last year, with 1 vote against. Nineteen of the 20 economists who shared their estimates on the policy stance expected a move in this direction, while one predicted a change in guidance. In his statements after the decision, Reserve Bank of India Governor Shaktikanta said, “The MPC is ready to take action if the situation requires it. Bringing headline inflation within the tolerance band is not enough. We must continue to focus firmly on bringing inflation to the 4% target.” Monsoon rains had pushed up inflation Floods in parts of India, as well as erratic monsoon rains, had pushed up food prices in the world's most populous country, pushing retail inflation to a three-month high of 4.81% in June. Economists believe last month's reading exceeded the bank's 2-6% target range because of higher vegetable prices and rising rice and wheat costs. The bank also raised its 2024 inflation forecast to 5.4% from 5.1%