MUMBAI: The Reserve Bank of India on Wednesday kept the repo rate unchanged at 6.5%, for the 10th time in a row, but changed its stance to ‘neutral’ that may lead to a cut in the forthcoming policies.
According to analysts, the change in stance is the first step towards a rate cut and signals the beginning of the easing cycle as early as December.
However, RBI governor Shaktikanta Das, who completes his five-year term in December, refused to accept the policy stance change is a pivot. “The prevailing and expected inflation-growth balance has created conditions for a shift in the monetary policy stance as there is greater confidence on last mile of disinflation,” he said.
The banking regulator also retained the retail inflation projection at 4.5% for 2024-25, with Das stressing the central bank will have to closely monitor the price situation and keep the ‘inflation horse’ under tight leash lest it may bolt again.
RBI maintained status quo despite the US Federal Reserve lowering the benchmark rates by 50 basis points last month. The central banks of some developed nations have also reduced their interest rates.
This was the first meeting after the RBI’s monetary policy committee was reconstituted last month. The three newly appointed external members are Ram Singh, Saugata Bhattacharya and Nagesh Kumar.