In its most recent trio of gatherings held in the months of April, June, and August, the Reserve Bank of India (RBI) steadfastly maintained the repo rate at a consistent 6.5 percent. The repo rate, signifying the interest rate at which the RBI extends loans to other financial institutions, remained unaltered. Commencing from the month of May in the year 2022, the Reserve Bank embarked on a series of gradual escalations in the policy rate, responding to the ongoing Russia-Ukraine conflict, ultimately reaching the 6.5 percent threshold by February of the current year. Since then, this rate has persevered without alteration through the past three bi-monthly assessments of monetary policy.
The government has conferred upon the Reserve Bank the solemn responsibility of upholding the Consumer Price Index (CPI)-based retail inflation at a meager 4 percent, granting a narrow leeway of 2 percent on either side of this benchmark. Regrettably, in the month of August, retail inflation scaled to a considerable 6.83 percent, transgressing the RBI's tolerable bounds. The trajectory of inflation appears poised to remain elevated for the immediate future, largely attributed to the persistent hovering of oil prices at an imposing $90 per barrel, surpassing the RBI's earlier prognosis of $85 per barrel.
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