Wed Oct 09 06:42:41 UTC 2024: ## RBI Maintains Status Quo on Repo Rates Amidst Stable Inflation Projections

**Mumbai, October 25, 2023:** The Reserve Bank of India (RBI) has maintained the status quo on repo rates during its October policy meeting, keeping them unchanged despite the recent 50 basis point rate cut by the US Federal Reserve. This decision comes as the central bank projects retail inflation for FY 2024-25 at 4.5 percent, assuming a normal monsoon and stable supply conditions.

The Monetary Policy Committee (MPC) expects CPI inflation to hover around 4.1 percent in Q2, 4.8 percent in Q3, and 4.2 percent in Q4 of FY 2024-25, with a projection of 4.3 percent for Q1 of 2025-26. This stability in inflation is attributed to anticipated easing of food inflation later in the fiscal year due to a good monsoon and adequate buffer stocks of essential commodities.

Despite the recent rate cut by the US Fed, RBI Governor Shaktikanta Das highlighted that macroeconomic parameters of inflation and growth are currently well balanced. While headline inflation is on a downward trajectory, its pace has been slow and uneven. This cautious approach has led the RBI to shift its policy stance from withdrawal of accommodation to neutral, signaling a more balanced approach in managing inflation and supporting growth going forward.

The Governor emphasized the need for careful consideration regarding future policy decisions, stating that the “inflation horse has been brought to the stable within the tolerance band. We have to be careful about opening the gate.”

This decision marks the first RBI policy announcement following the Federal Reserve’s recent rate cut. The central bank remains committed to maintaining Consumer Price Index (CPI) based retail inflation at 4 percent, with a 2 percentage point margin on either side.

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