Thu Dec 05 15:18:57 UTC 2024: ## RBI Holds Steady on Repo Rate, Hints at Future Liquidity Easing

**Mumbai, India –** The Reserve Bank of India (RBI) concluded its three-day Monetary Policy Committee (MPC) meeting today, maintaining the repo rate at 6.5 percent for the eleventh consecutive time. While a majority of analysts predicted this status quo, some anticipated a 25-basis-point cut. RBI Governor Shaktikanta Das announced the decision at 10 am this morning.

Despite holding the repo rate, the RBI signaled a shift towards increased liquidity in the financial market. While no changes were made to the cash reserve ratio (CRR) or statutory liquidity ratio (SLR) at this meeting, the statement strongly implied upcoming measures to ease liquidity, potentially including cuts to CRR or open market operations (OMOs). This suggests a potential shift in monetary policy in the near future.

The current inflation rate, at 6.21 percent in October – a 14-month high – remains above the RBI’s target range of 2-6 percent. While the RBI currently projects inflation at 4.5 percent for fiscal year 2025, analysts predict an upward revision to around 4.8 percent. The RBI’s GDP growth projection for FY25 is also a point of concern, currently standing at 6.8 percent, down from 7 percent projected in October and following a seven-quarter low of 5.4 percent in the September 2024 quarter.

The decision to hold the repo rate comes in contrast to recent rate cuts by the US Federal Reserve, Bank of England, and European Central Bank. The RBI’s next moves will be closely watched by investors and analysts alike, with particular focus on future liquidity adjustments and any revisions to inflation and GDP growth projections. The central bank also indicated that they may address further topics within their purview, such as digital payment systems and regulatory changes for financial institutions.

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