Rbi Monetary Policy Repo Rate
The Reserve Bank of India's (RBI) latest Monetary Policy Committee (MPC) meeting in October 2024 resulted in no change to the key repo rate, which remains at 6.5%. This decision reflects the central bank's cautious approach as it navigates persistent inflationary pressures. Despite concerns over rising prices, the RBI decided to adopt a neutral stance in this policy review, signaling that both inflation and economic growth are expected to remain relatively stable moving forward.
Inflation, particularly food inflation, has been a major focus. RBI Governor Shaktikanta Das emphasized that while inflation is now closer to the target range, the central bank remains vigilant. He metaphorically referred to inflation as a "horse" that must be kept "under tight leash," indicating the delicate balance needed to prevent it from spiking again. Das hinted that food inflation pressures may ease later in the fiscal year, providing some relief to households.
On the economic front, the RBI retained its GDP growth forecast of 7.2% for FY25 but made slight adjustments to quarterly projections. Growth in the second quarter (Q2) is now expected to be 7.0% instead of 7.2%, while Q3 and Q4 projections were slightly adjusted upward. The central bank acknowledged the impact of global geopolitical tensions but noted that the Indian economy remains robust, bolstered by a strong monsoon season.
For borrowers, the unchanged repo rate means there will be no immediate impact on home loan EMIs. However, the repo rate remains a key tool for the RBI to manage inflation, and any future hikes could directly affect lending rates, including home loans.
The RBI's focus remains on maintaining price stability while supporting growth, with a keen eye on both domestic and global economic developments. The next MPC meeting is scheduled for December 2024, where further policy adjustments might be considered depending on inflation and growth trends.
For more detailed updates, the minutes of this MPC meeting will be published on October 23, 2024.
The latest update from the Reserve Bank of India (RBI) on its monetary policy, as of October 2024, shows that the repo rate has been left unchanged at 6.50%. This is in line with the RBI's cautious approach to managing inflation and sustaining economic growth. Despite elevated food inflation, which remains a key concern, the central bank is optimistic that inflationary pressures will subside later in the fiscal year, particularly in the food sector
In its October policy review, the RBI shifted its stance to neutral, signaling that it believes inflation and economic growth are now more balanced. However, it remains focused on ensuring that inflation does not surge again, describing inflation management as keeping the "horse" under control to prevent it from "bolting".
From a growth perspective, the central bank held its forecast for India's GDP growth at 7.2% for FY25. Although there were some minor adjustments to the quarterly estimates, the overall economic outlook remains stable. The RBI highlighted the risks posed by geopolitical tensions and global economic uncertainty, but it is optimistic about the domestic economy, especially due to strong rural demand supported by a good monsoon season.
For borrowers, this decision means no immediate change in home loan EMIs. Since the repo rate directly impacts interest rates for loans and borrowings, maintaining the rate at 6.5% ensures that lending rates, including for home loans, remain stable.
The next MPC meeting is scheduled for December 2024, where further revisions to the policy may be considered depending on inflationary trends and other economic factors
