Governor Shaktikanta Das of the Reserve Bank of India (RBI) has made a crucial decision to maintain the repo rate at a stable 6.50%, marking the 11th time with no adjustments. The last change occurred in February 2023 when it was increased by 25 basis points. Since then, there has been no alteration.
In his final monetary policy announcement, Governor Das stated that the majority of the committee members opted to keep the repo rate unchanged, emphasizing a focus on managing inflation rather than reducing rates.
Governor Shaktikanta Das affirmed that the central bank's policy repo rate remains at 6.5%, and a neutral stance has been maintained by a 4:2 majority. He indicated that the stable repo rate reflects a cautious approach to current economic conditions, highlighting the vital societal importance of price stability.
Governor Shaktikanta Das announced a reduction in the forecasted GDP growth for 2024-25 to 6.6%, with an anticipated 6.8% growth in the third quarter and 7.2% in the fourth quarter. The first and second quarters of the next year are expected to see growth rates of 6.9% and 7.3%, respectively.
For the fiscal year 2025, the RBI estimates CPI inflation at 4.8%, underscoring ongoing challenges in balancing inflation and growth. Das noted global inflation pressures due to weather-related challenges, financial instability, and geopolitical tensions.
The RBI's MPC meets every two months, where Governor Das and the six-member team discuss inflation and rule changes. Repo rate changes directly affect bank loan EMIs; lower rates reduce EMI amounts, while increases raise them. The repo rate is the rate at which a country's central bank loans money to commercial banks in shortage situations, used by monetary authorities to control inflation.
