MUMBAI: The Reserve Bank of India's (RBI) decision to not hike the repo rate cheered the market and started discussions of extended pause and no more rate hikes this year.
RBI Governor Shaktikanta Das, however, dashed such hopes and said the decision to pause was 'for this meeting only'. Keeping alive the possibility of a rate hike in the next Monetary Policy Committee meeting, the governor said that the central bank will 'not hesitate' to take further action on rates if needed.
The next meeting of the RBI's Monetary Policy Committee is scheduled from June 6 to 8.
"If I have to characterise today's monetary policy in just one line... it's a pause, not a pivot," Das said in a press conference held after the announcement of the policy review.
Earlier in the day, the six-member MPC unanimously decided to pause after repeated hikes in rate over the last 11 months, surprising analysts who were expecting the central bank to make a final 25 basis points (0.25%) hike before opting to pause. The benchmark policy rate (repo rate) is 6.5 percent.
Speaking to the reporters, the governor said that the RBI's target is to get headline inflation to 4 per cent from the 6 per cent levels at present, and the monetary policy will be focused on progressively aligning with the target. He said the job to decisively bring down inflation is 'not yet finished', and RBI's policy priority continues to be price stability.
The central bank has been raising rates to cool down prices as inflation has remained above its tolerance band of 2-6 percent over the past several months.
Deputy Governor Michael Patra said RBI has marginally upped its FY24 growth estimate to 6.5 percent primarily on the assumption of a decline in the average oil price to $85 per barrel as against $90 per barrel earlier.