New Delhi: The Reserve Bank of India (RBI) has kept its key interest rate unchanged at 6.5% for the tenth consecutive meeting, as predicted by experts, but has changed its policy stance to "neutral" ¹. This shift in stance opens the door for potential rate cuts in the future, amidst early signs of an economic growth slowdown.
RBI Governor Shaktikanta Das announced the decision after the three-day meeting of the six-member RBI Monetary Policy Committee (MPC), which concluded on October 9, 2024. This was the first MPC meeting after the government appointed three new external members to the panel.
Key Takeaways from RBI MPC Meeting
- Repo Rate: Remains unchanged at 6.5%
- Policy Stance: Changed to "neutral" from "withdrawal of accommodation"
- GDP Growth Estimates: FY25 growth estimates retained at 7.2%
- CPI Inflation Forecast: FY25 inflation forecast unchanged at 4.5%
The RBI has also made some additional announcements, including:
- Broadening Responsible Lending Conduct Norms: To include micro and small enterprises (MSEs)
- Capital Raising Avenues for Primary (Urban) Cooperative Banks: A discussion paper will be issued
- Reserve Bank Climate Risk Information System: To be created
- Enhanced Transaction and Wallet Limits for UPI: To facilitate digital transactions
- Beneficiary Account Name Look-up Facility for RTGS and NEFT: To improve payment systems
Expert Insights
Experts believe that the RBI's decision to keep interest rates unchanged was driven by the need to balance inflation and economic growth. The shift to a neutral stance, however, indicates that the RBI is prepared to cut rates if necessary ¹. Some economists predict a rate cut as early as February 2025.
Market Reaction
The market has responded positively to the RBI's announcement, with the Nifty targeting the 25,330 and 25,500 levels in the near term. The Bank Nifty is expected to aim for 51,700 and 52,300 as immediate targets.