Fri Dec 06 07:33:04 UTC 2024: **RBI Holds Key Interest Rate Steady at 6.5%**

**Mumbai, December 6, 2024** – The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) today announced it will keep the policy repo rate unchanged at 6.5% for the eleventh consecutive time. This decision, announced by Governor Shaktikanta Das, maintains a neutral stance, prioritizing a durable alignment with the 4% inflation target while supporting economic growth.

While acknowledging a recent slowdown in growth, revised downward to 5.4% in the second quarter, the MPC noted that the outlook for the second half of the year and into 2025 remains resilient, albeit requiring monitoring. The slowdown was primarily attributed to a significant deceleration in industrial growth, particularly in sectors like petroleum, iron and steel, and cement. However, high-frequency indicators suggest a bottoming out in Q2, with subsequent recovery driven by festive demand and increased rural activity.

Inflation remains a concern. Although gradually moving towards the target, the MPC noted a sharp increase in September and October due to unexpected food price hikes. While core inflation remains subdued, lingering food price pressures are expected to keep headline inflation elevated in the third quarter (October-December). However, the MPC anticipates some relief from January to March, citing factors like expected good harvests and seasonal winter corrections in vegetable prices.

The MPC projected Consumer Price Inflation (CPI) for 2024-25 at 4.8%, with 5.7% in Q3 and 4.5% in Q4. For 2025-26, Q1 and Q2 inflation projections are 4.6% and 4%, respectively. The risks associated with these projections are considered evenly balanced. Governor Das emphasized the importance of price stability for all segments of the economy, from small vendors to large corporations, while acknowledging the need to support growth. The MPC highlighted the global economic resilience despite headwinds and warned of potential threats from rising protectionism.

Read More