New Delhi, December 2024.
The Reserve Bank of India (RBI)-led Monetary Policy Committee decided to keep the repo rate—the key lending rate—unchanged at 6.5%. While announcing the decision, RBI Governor Shaktikanta Das elaborated on the rationale behind maintaining the status quo.
The MPC observed that India’s near-term inflation and growth outlooks have worsened slightly since the October policy review. However, economic activity is expected to improve, supported by rising business and consumer confidence, as indicated by the Reserve Bank’s surveys.
Dharmakirti Joshi, Chief Economist at CRISIL, anticipates rate cuts beginning in February 2025. “Inflation is expected to ease by the fiscal year-end with a robust rabi crop likely to correct vegetable prices sharply,” Joshi explained.
The RBI delivered in line with our expectations. While retaining its focus on last mile disinflation being achieved the RBI has taken note of the tightening durable liquidity and hence delivered the CRR cut. We see room for a 25-basis points repo rate cut in February with much dependent on the downside risk to growth which we foresee. Further disinflationary trends and global environment will also be key.” Said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank
