RBI Maintains Repo Rate at 6.5% for Seventh Consecutive Time

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5th April 2024: The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5% for the seventh consecutive time. This decision was made during the monetary policy review meeting held by the RBI. The repo rate is the rate at which the central bank lends money to commercial banks, and it plays a crucial role in determining the cost of borrowing for individuals and businesses.

By maintaining the repo rate at 6.5%, the RBI is signaling its stance on balancing economic growth and inflation. A lower repo rate can stimulate borrowing and spending, potentially boosting economic activity. On the other hand, a higher repo rate can help control inflation by making borrowing more expensive, but it may also dampen economic growth.

The RBI’s decision to keep the repo rate unchanged suggests that it is satisfied with the current economic conditions and inflation levels. It also indicates a cautious approach, as the central bank monitors various factors such as global economic trends, domestic inflationary pressures, and the impact of policy changes on the economy before making any adjustments to interest rates.

 POONAM TANDON

The Monetary policy was on expected lines on status quo on rates and no change in stance, the focus of the MPC to bring the inflation to 4% on a sustainable basis. The RBI Governor has stated that they will be nimble-footed with respect to liquidity. The GDP has been pegged at 7% for the year and the inflation at 4.5%. This careful stance reflects concerns over potential inflationary pressures arising from volatile food prices, recent upticks in oil prices, and robust economic growth. The policy also gives importance to growth while acknowledging inflationary risks from rising oil prices and volatile vegetable prices. The Governor also stated that the Rupee has been one of the most stable currencies which reflects India’s sound macroeconomic fundamentals, financial stability and improvements in the external position. All in all, it is a rational policy with a focus on growth and price stability. – Dr. Poonam Tandon, Chief Investment Officer

“We want to applaud the Reserve Bank of India for its forward-thinking approach and congratulate the regulatory body on completing its 90th anniversary earlier this week. The RBI has consistently led the way in guiding India’s economy towards stability.

RBI’s announcement to expand the access of UPI for Prepaid Payment Instruments (PPIs) through third-party applications, during the MPC meeting held today is a significant step towards financial inclusion. It grants PPI users the ability to seamlessly integrate their accounts with a wide range of UPI-enabled services, mirroring the convenience and flexibility traditionally reserved for standard bank account holders. This will not only simplify the payment process for PPI users but also open up a plethora of digital payment opportunities previously inaccessible to them, further enhancing customer convenience and boosting the adoption of digital payments, especially among small businesses. This move helps further Spice Money’s mission to extend digital payment and financial services to nanopreneurs and customers in rural and semi-urban India.

Furthermore, we appreciate the RBI’s ongoing efforts to simplify regulations and reduce compliance burdens. These initiatives not only demonstrate the regulator’s commitment to enhancing the ease of doing business in the fintech sector but also pave the way for greater innovation and growth opportunities.” –Mr. Dilip Modi, Founder, Spice Money

“The prudence of the RBI’s decision to maintain the repo rate at 6.5%, reflects a measured response to the dynamic global economic landscape. RBI’s emphasis on domestic factors showcases its commitment to financial stability and the crucial role of sustenance in navigating market uncertainties. The well measured policy stance will support the energy sector’s long-term sustainability and robustness, aligning with the industry’s vision for a cleaner and greener future. This decision highlights the significance of RBI’s initiatives in fostering economic growth, demonstrating a careful balance between economic expansion and inflation management.” – Mr. Kush, CEO, Essar Power

Ravi Ramesh Pilani_MD_Pilani Group

“The stable repo rate indicates a similar outlook for home loan interest rates. This provides some certainty to home buyers in terms of what to expect when it comes to borrowing costs. This stability can be seen as positive for both new home buyers looking for loans and existing borrowers with floating rates, offering some relief in terms of financial planning. For borrowers with floating-rate loans, a stable repo rate reduces the risk of a sudden jump in their monthly EMIs due to rising interest rates. This allows for better budgeting and financial planning.

A stable economic environment, often signaled by a steady repo rate, can boost consumer confidence. This might encourage people to spend more, potentially benefiting businesses and the overall economy”. – Mr. Ravi Ramesh Pilani, MD at Pilani Realty.

“Monetary Policy Committee of RBI maintained Repo Rate at 6.5%, which was on expected lines. Whilst there is expectation of normal monsoon, food price uncertainties along with rising oil prices will determine the timing of rate cuts. Strong manufacturing and services PMI and healthy corporate balance sheets provide confidence on economy and growth prospects.” – Mr.  Venkateswaran – Group president and CFO at Federal Bank