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India's central bank holds rates and vows to cut inflation

A man walks past the RBI logo at its Mumbai headquarters. — Reuters
A man walks past the RBI logo at its Mumbai headquarters. — Reuters

New Delhi: India's central bank kept interest rates unchanged for a sixth time in a row Thursday, as both inflation and economic growth remain high in the world's fifth-largest economy.

The Reserve Bank of India said its benchmark "repo rate", the level at which the central bank lends to commercial banks, would stay unchanged at 6.50 percent.

Interest rates were hiked by 2.5 percentage points between May 2022 and February 2023, but have stayed constant since then.

India's economy -- which is projected to grow at a brisk 7.3 percent in the financial year ending March 31 -- has performed "remarkably well", central bank governor Shaktikanta Das said.

Last week, India announced a smaller-than-expected fiscal deficit for this financial year, while shunning populist spending in the last budget before national elections expected to begin in April.

Retail inflation in India hit 5.69 percent in December 2023, higher than November's 5.55 percent, and well above the central bank's target of four percent.

India's "core" inflation, which excludes food and fuel costs, stood at 3.8 percent in December.

Das, speaking in the financial capital Mumbai, said the central bank was "resolute" in its commitment to pursue an "actively disinflationary" monetary policy.

The RBI's monetary policy committee "will carefully monitor any signs of generalisation of food price pressures, which can fritter away the gains in easing core inflation", Das said. — AFP

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