The Reserve Bank of India (RBI) has kept its policy rates at 6.50 percent, meaning there will be no relief from expensive EMIs (Equated Monthly Installments).
RBI Governor Shaktikanta Das announced this decision after a meeting of the RBI Monetary Policy Committee.
Out of six members in the committee, five voted against lowering the repo rate.
Even though the retail inflation rate was below the RBI’s target of 4 percent in July and August, the RBI did not change the repo rate.
Risks to Inflation
In his speech, Governor Das highlighted that global tensions are a major risk to inflation. Recent increases in the prices of metals and food could lead to higher retail inflation.
He noted that core inflation has risen in July and August, and retail inflation is expected to increase sharply due to the base effect.
The RBI predicts retail inflation to be 4.5 percent for the financial year 2024-25.
Additionally, inflation estimates are 4.1 percent for the second quarter, 4.8 percent for the third quarter, and 4.2 percent for the fourth quarter of the current financial year.
Disappointment for Bank Customers
Banking expert Ashwani Rana commented that the RBI has kept the repo rate unchanged for the fifth time in 2024.
The RBI is working to control inflation, but food inflation remains above the target.
This is why the repo rate is still at 6.50 percent. Customers hoping for a reduction in the repo rate have been let down.
After the Federal Reserve cut interest rates, many expected the RBI would follow suit, offering some relief to those paying high EMIs, especially before the festival season. However, this did not happen.
