The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the bank rate at 6.75 per cent.

RBI hiked the repo rate from 4 per cent to 6.5 per cent between May last year and February this year before putting a pause on the hikes.

The committee also decided to stay focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth, an RBI release said.

Retail inflation, at 4.87 per cent in October, remained under the RBI's target range of 4-6 per cent.

India's robust economic growth is another factor that the committee considered while keeping the pause on interest rates.

The country growth in the July-September quarter was 7.6 per cent compared to 6.2 per cent in the same period last year.

Domestic economic activity is exhibiting resilience. Real gross domestic product (GDP) grew year on year (YoY) by 7.6 per cent in the second quarter (Q2) of fiscal 2023-24, underpinned by robust investment and government consumption, which cushioned the drag from net external demand.

On the supply side, gross value added rose by 7.4 per cent in Q2, driven by buoyant manufacturing and construction activities.

Continued strengthening of manufacturing activity, buoyancy in construction and a gradual recovery in the rural sector are expected to brighten the prospects of household consumption, RBI noted.

Healthy balance sheets of banks and corporates, supply chain normalisation, improving business optimism and rise in public and private capital expenditure should bolster investment going forward, it said.

With improvement in exports, the drag from external demand is expected to moderate.

However, headwinds from the geopolitical turmoil, volatility in international financial markets and geoeconomic fragmentation pose risks to the outlook, it observed.

Therefore, real GDP growth for FY24 is projected at 7 per cent with Q3 at 6.5 per cent; and Q4 at 6.0 per cent.

Real GDP growth for Q1 FY25 is projected at 6.7 per cent; Q2 at 6.5 per cent; and Q3 at 6.4 per cent. The risks are evenly balanced, RBI added.

Fibre2Fashion News Desk (DS)