The Reserve Bank of India unexpectedly kept the base rate at 6.5%

On Thursday, the Reserve Bank of India (RBI) unexpectedly kept its key interest rate at 6.5% per annum. Up to this point, the Indian central bank has increased the rate following the results of six consecutive meetings, as a result of which it reached its maximum since January 2019 at 6.5%.

Analysts on average predicted a 25 basis point rate hike at the April meeting.

It is known that since May last year, the Reserve Bank has raised the rate by a total of 250 bps to combat inflation. It is worth noting that such steps have brought results: consumer prices in India in February increased by 6.4% year-on-year after rising by 6.5% in January. Despite this, inflation is still above the upper limit of the Central Bank's target range of 2-6%. 

During the meeting, the central bank also confirmed the forecast that the country's GDP will increase by 7% in the current fiscal year (which began in April). Expectations for the next fiscal year have been revised to 6.5% from 6.4%. Also next year, the regulator forecasts inflation at the level of 5.2% against the previously assumed 5.3%.