RBI Keeps Repo Rate Unchanged at 6.50%; Stance at Being "Neutral" The committee unanimously agreed to shift to a 'neutral' stance, with a clear focus on achieving sustained alignment of inflation with the target, while continuing to support economic growth
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On Wednesday, the Reserve Bank of India announced its decision to maintain the policy repo rate under the Liquidity Adjustment Facility (LAF) at 6.50 per cent. The last adjustment to the key rate occurred in February 2023, when the central bank raised it by 25 basis points, increasing it from 6.25 per cent to 6.50 per cent. The repo rate represents the interest rate at which banks borrow funds from the RBI.
The decision was made unanimously by the Monetary Policy Committee (MPC), comprising RBI Governor Shaktikanta Das, Rajiv Ranjan, Michael Debabrata Patra and the newly appointed members Saugata Bhattacharya, Dr Nagesh Kumar, and Ram Singh. The committee held meetings from the 7th to 9th of October 2024. The decision to keep the rate unchanged had a 5:1 majority.
The committee unanimously agreed to shift to a 'neutral' stance, with a clear focus on achieving sustained alignment of inflation with the target, while continuing to support economic growth.
Notably, 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.
"Going forward, the moderation in headline inflation is expected to reverse in September and likely to remain elevated in the near-term due to adverse base effects, among other factors. Food inflation pressures could see some easing later in this financial year on the back of strong kharif sowing, adequate buffer stocks and good soil moisture conditions which are conducive for rabi sowing. Adverse weather events continue to pose contingent risks to food inflation. Core inflation, on the other hand, appears to have bottomed out. Fuel component of CPI remains in contraction," said Shaktikanta Das, Governor, RBI.
Das's projection for GDP for FY 25 stands at 7.2 per cent. Meanwhile, he predicts quarterly real GDP growth as: Q2 at 7.0 per cent; Q3 at 7.4 per cent; and Q4 at 7.4 per cent.
Additionally, he projects the real GDP growth for Q1 of 2025-26 at 7.3 per cent.
