RBI keeps repo rate unchanged at 6.5%

The MPC headed by RBI Governor Urjit Patel said that the recent excise duty cut by the government on petrol and diesel will help contain inflation.

The Reserve Bank opted for a surprising status quo at the bi-monthly review on Friday on expectations of softening price rise, but changed the policy stance to "calibrated tightening" from "neutral".

A majority of the analysts and bankers were expecting the six-member Monetary Policy Committee to go at least for a 0.25 per cent hike in key rates at the review.

"The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis," the resolution of the MPC after a three-day meet said.

The repo rate, at which the RBI lends to the system, will continue to be at 6.5 per cent and the reverse repo at which it absorbs excess funds will be 6.25 per cent.

The Monetary Policy Committee (MPC) voted 5:1 in favour of a status quo, with only Chetan Ghate voting for a 0.25 per cent hike.

The MPC headed by RBI Governor Urjit Patel said that the recent excise duty cut by the government on petrol and diesel will help contain inflation.

Photograph: Danish Siddiqui/Reuters