RBI MPC: The Reserve Bank of India’s (RBI) 52nd Monetary Policy Committee meeting concluded on December 6, 2024, with the central bank deciding to maintain the repo rate at 6.5% for the 11th consecutive time. The Monetary Policy Committee (MPC) approved the decision with a majority vote of 4-2. This decision reflects the RBI’s cautious approach to monetary policy, as it seeks to balance inflation concerns with economic growth considerations.

RBI Governor Shaktikanta Das unveiled the decision in the monetary policy statement on Friday. The MPC decided to maintain its “neutral” policy stance. The meeting was kicked-off on Wednesday, December 04, 2024. The MPC has maintained status quo on 6.50% interest rate since February 2023.

Why Status Quo Is Maintained In RBI MPC Meeting?

The repo rate is kept unchanged due to concerns over sustained inflation and volatility in international markets. “MPC believes that only with durable price stability can we secure a strong foundation for high growth. MPC is committed to restoring inflation-growth balance in the interest of the economy,” said Das.

The central bank has decided to keep the Standing Deposit Facility (SDF) rate steady at 6.25% and the Marginal Standing Facility (MSF) rate and bank rate staying at 6.75%. Meanwhile, October saw inflation surge to a 14-month peak of 6.21%. Furthermore, this was fuelled by escalating food prices and geopolitical tensions that have significantly disrupted global supply chains.

Additionally, India’s GDP growth rate for Q2 FY25 decelerated to 5.4%, its lowest level in two years. This marks a significant decline from the 8.1% growth recorded in the same quarter of the previous year. Furthermore, this fell short of the RBI’s forecast of 7% for the quarter. The slowdown in GDP growth is largely blamed on the sluggish performance of the manufacturing and mining sectors.

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