RBI Governor Shaktikanta Das Holds Rates Unchanged, Warns of More Pain Ahead

RBI Governor Shaktikanta Das Holds Rates Unchanged, Warns of More Pain Ahead

Mumbai, August 8: Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday kept the repo rate unchanged at 4.40%, while raising the reverse repo rate by 0.25% to 3.75%. The decision was widely expected, as the RBI has been signaling a hawkish stance in recent months in order to combat rising inflation.

Das warns of more pain ahead as inflation stays high

In his statement, Das warned that inflation is likely to remain elevated in the near term and that more rate hikes are likely to be necessary. He said that the RBI will continue to take steps to ensure that inflation remains within its target range of 2-6%.

The decision to keep rates unchanged was met with mixed reactions from economists. Some said that it was the right decision, as the economy is still recovering from the pandemic and higher rates could dampen growth. Others said that the RBI should have raised rates more aggressively, in order to send a stronger signal to inflation.

RBI maintains status quo on rates, inflation woes to continue

The Reserve Bank of India (RBI) on Wednesday maintained the repo rate unchanged at 4.40%, while raising the reverse repo rate by 0.25% to 3.75%. The decision was widely expected, as the RBI has been signaling a hawkish stance in recent months in order to combat rising inflation.

In his statement, RBI Governor Shaktikanta Das said that the decision to keep rates unchanged was taken in view of the evolving inflation and growth dynamics. He said that inflation is likely to remain elevated in the near term, but that it is expected to moderate in the second half of the year.

Das also said that the RBI will continue to take steps to ensure that inflation remains within its target range of 2-6%. He said that the RBI will use all its policy tools, including monetary policy, to achieve this objective.

The decision to keep rates unchanged is a relief for borrowers, who were expecting another rate hike. However, borrowers should still be prepared for more rate hikes in the coming months.

If you are a borrower, you should start planning for higher interest rates. This could mean making larger monthly payments, or extending the repayment period of your loan. You should also shop around for a better interest rate, if possible.

Experts say more rate hikes likely in coming months

Most economists believe that the RBI will continue to raise rates in the coming months, in order to combat inflation. Some say that the repo rate could be raised to 5% by the end of the year.

However, there is some uncertainty about the pace of rate hikes. The RBI will be closely monitoring the impact of the recent rate hikes on the economy, and it may decide to slow down the pace of hikes if it sees signs of a slowdown.

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What does this mean for borrowers?

The decision to keep rates unchanged is a relief for borrowers, who were expecting another rate hike. However, borrowers should still be prepared for more rate hikes in the coming months.

If you are a borrower, you should start planning for higher interest rates. This could mean making larger monthly payments, or extending the repayment period of your loan. You should also shop around for a better interest rate, if possible.

Overall, the RBI’s decision to keep rates unchanged is a cautious one. The RBI is clearly concerned about inflation, but it is also mindful of the impact of higher rates on the economy. The RBI will continue to monitor the situation closely, and it is likely to raise rates more aggressively in the coming months, if necessary.

Here are some additional details about the inflation woes that are likely to continue:

• Food inflation is likely to remain elevated in the near term, due to rising prices of essential commodities such as vegetables, pulses, and cereals.
• Fuel prices are also likely to remain high, due to the ongoing war in Ukraine.
• Core inflation, which excludes food and fuel prices, is also likely to remain elevated, due to rising input costs for businesses.

The RBI has said that it is committed to bringing inflation under control, but it is clear that this will be a challenge. The RBI will need to carefully balance the need to control inflation with the need to support economic growth. It is likely that the RBI will continue to raise rates in the coming months, but it will also need to take other measures to support growth, such as providing liquidity to banks and businesses.