(Image source from: Moneycontrol.com)

Reserve Bank of India (RBI) leader Sanjay Malhotra announced that the Monetary Policy Committee (MPC) reached a unanimous decision to keep the policy repo rate steady at 5.50 percent after a previous reduction of 100 basis points (bps) earlier this year. The RBI leader mentioned that the MPC has opted to maintain a neutral approach. The central bank lowered the repo rate by 25 basis points in both February and April, and by 50 bps in June. "In the longer run, the Indian economy has promising potential in the evolving global scenario, leveraging its built-in strengths..." the leader stated. The six-person committee, led by Governor Malhotra, began their three-day discussions on monetary policy on Monday.

The government has assigned the RBI the responsibility to keep the consumer price index (CPI) based retail inflation at 4 percent, allowing for a 2 percent variation either way. Since February of this year, retail inflation has been consistently below 4 percent. The MPC is made up of three RBI members - Sanjay Malhotra (Governor), Poonam Gupta (Deputy Governor), Rajiv Ranjan (Executive Director) - along with three external members - Nagesh Kumar (Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi), Saugata Bhattacharya (Economist), and Ram Singh (Director, Delhi School of Economics).