RBI pauses to assess effects of rate increases
Surprise decision comes as inflation remains outside the central bank’s target band
The Reserve Bank of India kept its policy rate on hold today (April 6) at 6.5%, as it pauses to allow the effects of past rate increases to pass through to the economy.
The decision surprised analysts, most of whom had predicted a further 25-basis point rate increase. Inflation in India surged outside the upper limit of the RBI’s target band in January, hitting 6.5%, and remained off target at 6.4% in February. The RBI aims for 4% inflation within a band of plus or minus two percentage points.
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