• Steadfast Repo Rate: The Reserve Bank of India (RBI) announces its decision to keep the key lending rate, the repo rate, unchanged at 6.5%. This marks the fifth consecutive maintenance of the rate, reflecting the central bank's commitment to stability. 
• Inflation Control in Focus: RBI Governor Shaktikanta Das emphasizes the pivotal role of inflation control in the decision-making process. With concerns about potential spikes in food prices in the upcoming months, the monetary policy committee aims to strike a balance between sustaining economic growth and keeping inflation within target levels. 
• Enhanced UPI Payment Limits: In a notable move, the RBI raised the UPI payment limits for hospitals and educational institutions from ₹1 lakh to ₹5 lakh per transaction. This initiative aligns with the ongoing digital payment trends and aims to facilitate larger transactions in specific sectors. 

As the global economy displays signs of recovery, the RBI remains cautious, citing persistent challenges in inflation across various countries. Despite these uncertainties, the Indian economy stands resilient, surpassing Q2 GDP forecasts and maintaining fiscal consolidation. The central bank expresses its commitment to fortifying the country's economic fundamentals, emphasizing the eminently manageable external balance. The decision to keep the repo rate unchanged has immediate market impacts, with the Nifty reaching 21,000 for the first time. The RBI's policy stance of "withdrawal of accommodation" aims to align inflation progressively with the committee's target while supporting overall economic growth.

Looking ahead, the RBI projects retail inflation at 5.4% for the Financial Year 2024, reflecting a forward-looking approach. Additionally, the growth projection for the current financial year is raised to 7%, showcasing optimism fuelled by government spending and manufacturing.

It's noteworthy that the RBI had previously raised the repo rate by a total of 250 basis points since May 2022 to curb inflation. The efforts resulted in a four-month low of 4.87% in October, although inflation is expected to hover above the RBI's 4% medium-term target. The latest GDP figures for the July-September quarter, growing at 7.6%, exceeding both polled median estimates and the RBI's initial projection of 6.5%, indicating a positive economic trajectory for India.

 

(With inputs from agencies)