The Reserve Bank of India (RBI), amid concerns over high inflation and slowing economic growth, announced on Friday that it would keep the repo rate steady at 6.5 percent. This decision was made with a 4:2 majority by the Monetary Policy Committee (MPC). RBI Governor Shaktikanta Das said that the Standing Deposit Facility (SDF) rate would remain at 6.25 percent, while the Marginal Standing Facility (MSF) rate and the Bank Rate would continue at 6.75 percent.
Das said that the RBI would maintain its neutral monetary policy stance, emphasizing the importance of price stability for all sections of society. “The journey toward disinflation is proving to be long and arduous. The recent pickup in inflation calls for protection of the gains achieved so far,” he said. The central bank also revised its retail inflation projection for FY25 upward to 4.8 percent from the earlier 4.5 percent, citing adverse near-term factors since the last policy meet in October.
The six-member MPC sat in for its deliberations on Wednesday, with Governor Das chairing the final meeting of his current term that will end on December 10. The announcement was eagerly awaited, as it marked the last bi-monthly policy review for the year. “Monetary Policy Statement coming up on December 6, 2024, at 10:00 am,” the RBI posted on its official handle on ‘X’ (formerly Twitter).
Repo Rate Same Since Feb 2023
RBI maintained the repo rate at 6.5 percent since February 2023 as the economic challenges are getting more serious. India’s GDP growth has been slowed to a two-year low of 5.4 percent in the July-September quarter of this fiscal year from 8.1 percent in the same period last year. Manufacturing and mining sectors are the primary reasons behind this slowdown.
Governor Das emphasized the need for the central bank to maintain the fruits of disinflation amidst the headwinds from inflationary pressures and subdued growth.
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