Reserve Bank of India Surprised Keeping its Key Repo Rate at 6.50%

The Reserve Bank of India on Wednesday surprised by keeping its key repo rate at 6.50% during its April meeting. Guidance however was hawkish as Governor Shaktikanta Das said “our job is not yet finished and the war against inflation has to continue” but markets nevertheless drove a bull steepener across the Indian rates curve.


The Reserve Bank of India Monetary Policy Committee (MPC) decision followed a 25-bps hike in February, bringing the rate to level not seen since March 2019, in line with global central banks tightening rates. Policymakers had stepped up efforts to bring down inflation which has stayed above the upper end of the central bank’s target this year.

India Interest Rate

The central bank kept the standing deposit facility (SDF) rate and the marginal standing facility (MSF) rate at 6.25% and 6.75, respectively.

Indian Inflation

The annual consumer price inflation in India slowed slightly to 6.44% in February of 2023 from 6.52% in January, compared to market forecasts of 6.35%. The inflation stayed above the Reserve Bank of India target of 2-6% for a second consecutive month, after a slowdown in the last three months of 2022, due to the rupee depreciation and as companies are passing on some input price increases to clients.

India Inflation Rate
  • Food inflation was little-changed at 5.95%, compared to 5.94% in the previous month, with prices for spices (20.2%), cereals (16.7%) and milk (9.7%) recording the biggest increases while prices of vegetables dropped 11.6%.
  • A slowdown was seen in cost for fuel and light (9.9% vs 10.84%), miscellaneous (6.12% vs 6.21%) and clothing and footwear (8.8% vs 9.08%)
  • Prices rose faster for housing (4.83% vs 4.62%); and pan, tobacco, and intoxicants (3.22% vs 3.07%).

Source: RBI

From The TradersCommunity Research Desk