RBI keeps rates unchanged; relief for borrowers

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The Reserve Bank of India on Friday decided to keep the policy rate unchanged at 6.5% for fourth time in a row as it maintains a tight vigil on inflation. This means the home loan and auto loan rates may also remain unchanged for now. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. This was announced by the RBI governor Shaktikanta Das in Mumbai on Friday after the three-day Monetary Policy Committee (MPC) meeting. He said the MPC will remain watchful of the inflation and remains resolute in its commitment to align inflation to the targeted level. According to him, the growth projection has been retained at 6.5 per cent for the current financial year with risks evenly balanced.  The RBI also retained the GDP growth forecast for current fiscal at 6.5% with risks evenly balanced. The MPC meeting took place against the backdrop of Consumer Price-based Inflation (CPI) touching 6.83 per cent in August. The September print of inflation is expected next week. Das said “Our inflation target is 4 per cent, not 2 to 6 per cent and we are vigilant to evolving inflation target.” The government has mandated the RBI to keep CPI inflation at 4 per cent with a margin of 2 per cent on either side.