December 6, 2024
New Delhi, India
RBI Monetary Policy
The Reserve Bank of India (RBI) maintained the repo rate at 6.5% during its Monetary Policy Committee (MPC) meeting on Friday, December 6. RBI Governor Shaktikanta Das emphasized that sticky inflation remains a concern, influencing both economic growth and consumer spending.
Key Highlights of the RBI MPC Meeting
Repo Rate and Policy Stance
- The repo rate was kept unchanged at 6.5% for the 11th consecutive meeting.
- The policy stance remains “neutral,” reflecting the RBI’s balanced approach amid economic uncertainties.
Growth Forecasts Trimmed
- FY25 GDP growth forecast was revised downward to 6.6% from the earlier estimate of 7.2%.
- Quarterly projections also saw reductions:
- Q3FY25: 6.8% (previously 7.4%)
- Q4FY25: 7.2% (previously 7.4%)
- Q1FY26: 6.9% (previously 7.3%)
Inflation Projections Revised Up
- FY25 inflation forecast increased to 4.8% from 4.5%.
- Quarterly inflation expectations adjusted upward:
- Q3FY25: 5.7% (previously 4.8%)
- Q4FY25: 4.5% (previously 4.2%)
- Q1FY26: 4.6% (previously 4.3%)
- Q2FY26: Targeted at 4%.
Liquidity and Foreign Investments
- CRR Cut: The RBI reduced the cash reserve ratio by 50 basis points to 4%, infusing liquidity into the banking system.
- FCNR-B Deposits: Interest rate ceilings on FCNR-B deposits were increased to attract more foreign investments, positioning India as a lucrative destination for global capital.
Outlook
Governor Das expressed confidence that inflation could reach the RBI’s target of 4% by the second quarter of FY26, while growth is expected to stabilize. The measures announced aim to balance inflation control with supporting economic recovery.
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