RBI MPC meeting: Repo rate unchanged. What are other key takeaways? 10 points
The repo rate was left unchanged at 6.5% for the 11th consecutive time.
Reserve Bank of India (RBI) governor Shaktikanta Das on Friday announced several key decisions taken at the recent three-day meeting of the central bank's Monetary Policy Committee (MPC).
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This was MPC's last meeting of the year and followed the one in October. The next meeting will be held in February.
Here are the key takeaways:
(1.) The six-member panel decided to keep the repo rate unchanged at 6.5% for the 11th consecutive time. It was raised to the current 6.5% in February 2023.
(2.) However, two members voted against keeping the key lending rate steady.
(3.) The RBI opted to maintain its “neutral” stance, taken in the October meeting. Then, the committee changed its stance from the previous “withdrawal of accommodation” position.
(4.) The MPC revised its projection for India's gross domestic product (GDP) growth to 6.6%, down from the earlier 7.2%.
(5.) Similarly, the estimation for Q3FY25 was cut to 6.8% from 7.4%, while that for Q4FY25 was lowered to 7.2% from 7.4%.
(6.) Announcing the GDP growth projections, Governor Das noted that “high-frequency indicators suggest the slowdown in domestic activity has bottomed out, with recovery driven by festive demand and increased rural activity.”
(7.) The inflation forecast for the fiscal year was projected at 4.8%. In the October meeting, it was kept unchanged at 4.5%.
(8.) Meanwhile, the Consumer Price Index (CPI) was estimated at 4.6% in Q1 and 4.2% in Q2.
(9.) On the other hand, the Cash Reserve Ratio (CRR) was cut to 4% for all banks in a bid to ease potential liquidity stress.
(10.) New announcements included podcasts as a new medium for communication, an artificial intelligence (AI)-based model to prevent digital fraud, and extension of the credit line on Unified Payments Interface (UPI) to Small Finance Banks as well.
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