RBI MPC Meeting Live: Repo Rate Unchanged At 6.5%, CRR Slashed By 50 bps

Price stability is very important for the people, but growth is also important. Last mile of disinflation is turning out to be prolonged and arduous for economies, says RBI Governor Shaktikanta Das.
 

To ease the potential liquidity stress, the CRR of all 4 per cent of NDTL. 

“To ease the potential liquidity stress, CRR is reduced to 4 per cent of NDTL, the reduction in CRR is consistent with neutral stance, 1.16 lakh crore liquidity is free up to the banking system,” Shaktikanta Das said. 

Monetary policy affects the daily lives of people. MPC has a wide-ranging impact on people's lives. 

The RBI MPC is likely to resort to non-rate measures for injecting liquidity into the banking system to spur growth. The apex bank is likely to slash cash reserve ratio ( CRR). 

"The RBI is expected to keep its repo rate steady in December 2024, amidst concerns over inflation, capital outflows, a stronger dollar, and a weaker rupee. We expect inflation to moderate in Q4 FY25, but there are risks that growth may fall short of the current projection of 7 per cent for H2 FY25. This could prompt the RBI to ease rates in February, signaling a more accommodative stance as it navigates the delicate task of balancing India’s economic growth amidst uncertain global and domestic conditions,” said Suman Chowdhury, Executive Director and Chief Economist at Acuite Ratings.

India's GDP growth for the July-September quarter of FY25 (Q2) was just 5.4 per cent, the lowest in seven quarters, marking a significant slowdown driven by weak investment spending and sluggish performance in the manufacturing and mining sectors. Research from ICICI Bank suggests the RBI may revise its FY25 growth forecast lower from 7.2 per cent, adding further pressure on the MPC to stimulate economic activity.

Economist and Author PK Basu believes that this is the right time for rate cuts by RBI to revive growth. In Q2 of FY25, the GDP growth dipped to 5.4 per cent, which is far below than projected GDP of 6.5 per cent. 

This MPC meeting holds significant importance as the RBI’s decision will set the tone for monetary policy in 2025. With inflation concerns mounting and India’s GDP growth at a near two-year low, the MPC will be tasked with making crucial decisions to steer the economy. While some experts expect a reduction in the cash reserve ratio (CRR), others anticipate the RBI to hold rates steady in December, with a possible rate cut in February.