Reserve Bank of India (RBI) governor Shaktikanta Das said that the central bank has maintained the policy repo rate at 6.5%. The central bank maintained neutral stance with a 4:2 majority, he added.Â
The constant repo rate signals a cautious approach to current economic conditions, as per Das. “Monetary policy has a wide-ranging impact, price stability is important for every segment of society,” Das said during his last MPC statement.Â
This is for the 11th consecutive time that the RBI has kept the repo rate unchanged. The RBI has maintained the repo rate at 6.5% since February 2023. The pause in repo rate hikes came after 6 straight rate hikes of 250 basis points since May 2022.Â
In the October MPC meet, the central bank kept the repo rate at 6.5% while shifting its stance from ‘accommodative’ to ‘neutral’. Other key rates were also kept steady.Â
Moreover, the outgoing RBI boss mentioned that other policy rates such as the standing deposit facility (SDF) rate and marginal standing facility (MSF) rate were also unchanged.Â
He said that the SDF rate stood at 6.25% whereas MSF was pegged at 6.75%. Cash reserve ratio (CRR) stood at 4.5% whereas the statutory liquidity ratio (SLR) is pegged at 18%.
Furthermore, the central bank has pegged CPI inflation at 4.8% for FY25 due to challenges in balancing inflation and growth.
Das flagged risks such as weather disruptions, financial volatility, and geopolitical tensions, that are likely to push inflation higher. He added that food inflation is likely to persist, with relief likely only in Q4.Â
Das underscored the bank’s dedication to balancing inflation management with economic growth. He said: “Our aim is to adhere to the flexible inflation target.”
The RBI is mandated to keep CPI inflation between 2% to 6%, for which it uses repo rate, reverse repo rate, CRR and other policy rates. This was also Governor Shaktikanta Das’ last MPC meeting before his term ends next week. The MPC met on December 4-6.Â