The Reserve Bank of India's (RBI's) six-member monetary policy committee (MPC) on Friday decided to keep the policy repo rate unchanged at 6.5 per cent - the status quo for an 11th straight time - maintaining a "neutral" stance. Even as it reduced the cash reserve ratio (CRR) by 50 basis points to 4 per cent to boost liquidity in the system, it lowered the 2024-25 gross domestic product (GDP) growth projection to 6.6 per cent from 7.2 per cent earlier. The inflation projection for this financial year, meanwhile, was increased by 30 bps to 4.8 per cent.
Repo rate is the rate at which the RBI lends to commercial banks, while CRR is the proportion of deposits that banks must keep with the central bank. One basis point is the hundredth of a percentage point.
In what might make a case for a rate cut in the next policy review in February, food prices, which have lately caused a spike in headline retail inflation, are seen coming down in the January-March quarter.
The two external members of the MPC - Nagesh Kumar and Ram Singh - voted in favour of a 25-bp reduction in the repo rate. Kumar had favoured a rate cut in the previous policy meeting in October too.
This story is from the December 07, 2024 edition of Business Standard.
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This story is from the December 07, 2024 edition of Business Standard.
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