Highlights
- RBI has kept the policy repo rate unchanged at 6.5% for the 11th consecutive meeting.
- It shows RBI’s neutral stance despite inflation concerns.
- CPI inflation projection for FY25 at 4.8%.
- Markets are looking ahead to February 2025.
The Reserve Bank of India (RBI) has decided to keep the policy repo rate unchanged at 6.5% for the 11th meeting in a row.
RBI Governor Shaktikanta Das announced the decision, which reflects a neutral stance supported by a 4:2 majority.
“Monetary policy has a wide-ranging impact, price stability is important for every segment of society,” Das said during his final Monetary Policy Committee (MPC) statement.
The repo rate has remained at 6.5% since February 2023 following a series of six rate hikes totalling 250 basis points between May 2022 and February 2023.
The RBI’s decision to hold rates comes despite inflationary concerns and GDP growth slowing to 5.4% in Q2 FY25. Das highlighted key risks including weather disruptions, financial volatility and geopolitical tensions, which could push inflation higher.
“Food inflation is likely to persist, with relief likely only in Q4,” Das cautioned, adding that the central bank’s CPI inflation projection for FY25 stands at 4.8%. He reaffirmed the bank’s commitment to balancing growth and inflation:
“Our aim is to adhere to the flexible inflation target,” Das added.
Apart from the repo rate, the following key rates also remain unchanged –
- Standing Deposit Facility (SDF): 6.25%
- Marginal Standing Facility (MSF): 6.75%
- Cash Reserve Ratio (CRR): 4.5%
- Statutory Liquidity Ratio (SLR): 18%
Meanwhile, the Chief Executive for India & SE Asia at Cushman & Wakefield Anshul Jain said, “Amidst lingering inflationary concerns, RBI has decided to keep the repo rate unchanged at 6.5% for the 11th consecutive time, despite GDP growth tapering to 5.4% in Q2FY25 and recent rate cuts by the US Federal Reserve. While a neutral stance signals flexibility and remains focused on stabilizing the macroeconomic environment, a rate cut would have provided the necessary boost to the GDP while also improving homebuyer’s sentiment in the mid-and-affordable housing segment.”
Jain added, “However, we do anticipate that the RBI would provide the much-needed stimulus soon in the February-2025 MPC meet, to bolster the overall consumer spending. For the housing sector, in particular, lower lending rates would serve as a catalyst for a sustained momentum.”
This MPC meeting was the last for Governor Shaktikanta Das, whose term ends next week. Reflecting on his tenure, Das emphasized the RBI’s use of tools like the repo rate, reverse repo rate and CRR to maintain inflation within the mandated range of 2% to 6%.
For now, markets now look ahead to the February 2025 meeting.
FAQS
Q1. How long has the RBI kept the policy repo rate unchanged?
Answer. The Reserve Bank of India (RBI) has kept the policy repo rate unchanged at 6.5% for the 11th consecutive meeting.
Q2. What are some of the risks highlighted by RBI Governor Shaktikanta Das?
Answer. Governor Shaktikanta Das highlighted key risks such as weather disruptions, financial volatility and geopolitical tensions, which could push inflation higher.
Q3. What is the current CPI inflation projection for FY25 according to the RBI?
Answer. The central bank’s CPI inflation projection for FY25 stands at 4.8%.
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