MUMBAI – The Reserve Bank of India (RBI) kept its key lending rate unchanged at 6.5% for the eleventh consecutive time while significantly lowering the country’s growth forecast for the current fiscal year, citing persistent inflationary concerns.
The Monetary Policy Committee (MPC), in a 4:2 majority decision announced by RBI Governor Shaktikanta Das, maintained the repo rate at 6.5% despite GDP growth falling to a seven-quarter low of 5.4% in the July-September quarter.
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Key Developments:
- Growth forecast reduced to 6.6% from previous projection of 7.2%
- Inflation target revised upward to 4.8% from 4.5%
- Cash Reserve Ratio (CRR) reduced to 4% from 4.5%
- Expected liquidity injection of ₹1.16 lakh crore through CRR reduction
“Only with durable price stability can strong foundations be secured for high growth,” Governor Das emphasized during the announcement. He noted that inflation had surged above the 6% tolerance level in October, though food inflation is expected to ease in the next quarter.
The central bank’s decision comes as a disappointment to investors who had anticipated a rate cut. The RBI has maintained a pause in rate hikes since April 2023, following six consecutive rate increases totaling 250 basis points since May 2022.
On the economic front, Das expressed optimism about rural demand trending upward, while noting some moderation in urban demand. He also highlighted the global economy’s unusual resilience in 2024 and easing supply chain pressures over the past two months.
In additional measures, the RBI has:
- Raised interest rate ceiling on NRI deposits to strengthen the rupee
- Introduced new anti-fraud technology called “themulehunter.in“
- Implemented measures to enhance banks’ lending capacity
The maintenance of status quo on rates suggests that loan interest rates are likely to remain stable in the immediate future, as the central bank continues to prioritize inflation control over growth acceleration.
Source: https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=59244
