RBI Monetary Policy: Will Shaktikanta Das Announce a Rate Cut? Key Expectations

RBI Monetary Policy: RBI’s MPC meet is over. Governor Shaktikanta Das has kept rates unchanged with repo rate at 6.50% and CRR cut by 50 bps to 4%. Maintaining price stability is key he said.

He added that maintaining macro stability and creating buffers is important for the economy. India is well placed to benefit from global trends.

RBI has lowered FY25 growth to 6.6% and expects full year inflation to be 4.8%. Inflation has gone above the upper band driven by food prices.

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RBI expects seasonal food correction to bring down inflation in Q3. Geopolitical situation, market volatility and geopolitical conditions are key worries for the economy and pose upside risk to inflation.

At the last MPC meeting, 5 out of 6 members voted to keep the policy repo rate unchanged at 6.5%. They had also decided unanimously to change the stance to ‘neutral’ and to remain focused on durable inflation targeting while supporting growth. There is no urgency to cut the repo rate to support growth can be seen from the RBI’s November bulletin.

WHAT TO EXPECT?

This is the 5th MPC meet for FY25, with earlier meets in April, June, August and October. Key takeaways from the October meet were repo rate unchanged at 6.5%, stance changed to ‘neutral’ and other rates steady. This meet will tell us if the central bank cuts the repo rate or maintains status quo.

RBI has kept the repo rate unchanged at 6.5% since Feb 2023. Many expect the central bank to keep it so for now. But some believe the slowing economy and moderating inflation will pave the way for rate cut later.

Earlier, CEA V Anantha Nageswaran, Commerce Minister Piyush Goyal and FM Nirmala Sitharaman had spoken about rate cut.

RBI’s MPC meet is over. Governor Shaktikanta Das has kept rates unchanged with repo rate at 6.50% and CRR cut by 50 bps to 4%. Maintaining price stability is key he said.

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He added that maintaining macro stability and creating buffers is important for the economy. India is well placed to benefit from global trends.

RBI has lowered FY25 growth to 6.6% and expects full year inflation to be 4.8%. Inflation has gone above the upper band driven by food prices.

RBI expects seasonal food correction to bring down inflation in Q3. Geopolitical situation, market volatility and geopolitical conditions are key worries for the economy and pose upside risk to inflation.

RBI MPC Meeting December 2024 Key Points & Outcomes

Repo rate kept unchanged at 6.5%

Status quo on repo rate since February 2023

Monetary policy stance continues to be in ‘neutral

GDP growth projection for FY25 reduced to 6.6% from 7.2%

GDP growth forecast for Q1 FY25 at 6.9%; Q2 at 7.3%

Inflation projection for FY25 is forecasted to be at 4.8%

Inflation projection for Q3 at 5.7%; Q4 at 4.5%; Q1 FY26 at 4.6% and Q2 at 4%

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