The Reserve Bank of India on Thursday kept the repo rate and the reverse repo rate unchanged at 6% and 5.75%. The Monetary Policy Committee headed by RBI Governor Urjit Patel made the decision after a two-day meeting.

“The decision of the committee is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index inflation of 4%...while supporting growth,” the central bank said in a statement.

Repo rate is the rate at which the RBI lends money to commercial banks in the event of a shortfall of funds. Changes in the repo rate affect bond yields and influence borrowing costs and loan rates.

Inflation projections

At the meeting, the RBI also lowered the retail inflation target for the first half of the 2018-’19 financial year to 4.7% from 5.1% on the grounds of a normal monsoon forecast and moderation in food price rise. In February, the central bank had projected inflation in the 5.1% to 5.6% range in the same period.

For the second half 2018-’19, it has predicted an inflation outlook of 4.4%, lower than its last forecast of 4.5% to 4.6%.

The RBI has also lowered the inflation projection for the December-March quarter of the 2017-’18 financial year to 4.5% from the 5.1% it had forecast after the last Monetary Policy Committee meeting in February.

Ahead of the announcement, the Indian rupee was trading higher in the morning against the US dollar. The rupee opened at 65.03 a dollar. At 9.15 am, it was 65.02 a dollar, up 0.19% from Wednesday’s close.