For the third week in a row, the RBI maintains the key lending rate at 6.5%

The Reserve Bank of India increased its inflation prediction for the current fiscal year from 5.1% to 5.4%, citing rising vegetable costs

Mumbai: The country’s central bank today retained the benchmark lending rate at 6.5% for the third time in a row, but cautioned inflation rates are anticipated to climb due to higher vegetable costs.

Shaktikanta Das, Governor of the Reserve Bank of India (RBI), stated that the Monetary Policy Committee unanimously opted to keep the policy repo rate unchanged. As a result, loan interest rates are anticipated to remain steady.

Despite global shocks, the Indian economy is exuding increased strength and stability, according to the Governor, who added that India contributes 15% to global growth. According to him, the country is well positioned to profit from the unfolding revolutionary shifts.

The Reserve Bank of India increased its inflation prediction for the current fiscal year from 5.1% to 5.4%, citing rising vegetable costs. Inflation rose from 4.3% in May to 4.8% in June, and it is likely to rise further in July and August.

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“A spike in tomato prices led to accentuating food inflation in July,” stated the Governor, adding that the price increase was temporary and will subside in the coming months.

According to Mr. Das, the economy is beginning to feel the effects of the rate hikes taken cumulatively so far.

According to Mr. Das, the developments call for increased attention to the trajectory of inflation as it changes. He also noted that the domestic economy is doing well and is likely to continue to grow.

The RBI also held the real GDP growth prediction for the first quarter of the upcoming fiscal year at an anticipated 6.6% and the growth forecast for the current fiscal year at 6.5%.

He claimed that poor foreign demand and geopolitical unrest could have an adverse effect on economy, and that historical growth rates are likely to continue to be low globally. Although the rate of monetary policy tightening has moderated, he continued, policy rates may remain higher for longer.