India’s central bank held its key repo rate steady on Thursday following six consecutive hikes.

The Reserve Bank of India (RBI) stated the policy stance is focused on “withdrawal of accommodation,” indicating additional rate hikes may be considered if necessary. Governor Shaktikanta Das said the pause in rate hikes is “for this meeting only.”

In a unanimous decision, the monetary policy committee (MPC), made up of three members from the RBI and three external members, held the key lending rate at 6.50%, Reuters reports.

The majority of analysts had predicted one last hike of 25 basis points during the central bank’s current tightening cycle. Since last May, the repo rate has been increased by a total of 250 basis points.

“We have to be extremely prudent in our actions,” the RBI governor said in a statement.

Although the Reserve Bank of India has decided to pause rate hikes due to global macroeconomic and financial conditions, “our job is not yet finished, and the war against inflation has to continue,” Das added, echoing the aim of reverting inflation back to within the bank’s target of between 2% and 6%.

Following the RBI’s announcement, government bond yields crashed. The 10-year benchmark 7.26% 2032 bond yield declined to 7.1469% straight after the decision was announced, the lowest since mid-September last year, compared to 7.2857% before the decision. At the time of writing, the yield stood at 7.1843%.

In addition, India’s retail inflation increased 6.44% year-on-year in February, down from January’s 6.52% figure, but has remained over the RBI’s 2% - 6% target band for 10 of the last 12 readings, the Reuters report adds.

For 2023/24, the Reserve Bank of India sees inflation at 5.2%, whilst GDP growth is forecast at 6.5% in the financial year beginning 1st April.