Wed Oct 09 04:02:01 UTC 2024: ## RBI Expected to Hold Repo Rate Steady at 6.5% in October

**New Delhi:** The Reserve Bank of India (RBI) is likely to maintain the current repo rate at 6.5 percent in its upcoming monetary policy meeting in October, according to analysts. This decision comes as growth and inflation risks have yet to shift significantly, warranting continued withdrawal of accommodative monetary policies.

While the RBI’s stance remains focused on withdrawing accommodation, a shift to a neutral stance could be considered in December, allowing for greater flexibility in future rate decisions. For the time being, a status quo is expected.

India’s economic growth narrative remains steady, with the RBI likely to maintain its GDP growth forecast for 2024-25 at 7.2 percent, despite a dip to 6.7 percent in Q1. This dip was primarily attributed to a contraction in government spending related to the election cycle.

Inflation, however, remains a key area of focus, particularly in light of recent increases in food prices. Yet, analysts anticipate no changes to the inflation projection, considering the limited immediate impact of geopolitical tensions in the Middle East on India’s economy.

While recent oil price increases due to the Middle East conflict could potentially create noise, economists do not anticipate any immediate action on rates or stance by the RBI. The central bank is also expected to manage liquidity through existing tools like variable rate reverse repo auctions, rather than introducing new measures. This approach is deemed crucial for managing upcoming festive outflows and tax payments while maintaining a liquidity surplus.

Although crude oil prices have risen, the impact on India’s inflation is expected to be contained unless prices surge further. This outlook reinforces the expectation of a status quo in October, with a potential shift to a neutral stance possibly occurring in December.

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