Amid rising inflation and slowing GDP growth, the Reserve Bank of India (RBI), in its latest monetary policy review on Friday, announced that the repo rate will remain unchanged at 6.5%. The decision was made with a 4:2 majority by the six-member Monetary Policy Committee (MPC), chaired by RBI Governor Shaktikanta Das.

This marks the 10th consecutive time the central bank has kept the repo rate steady since February 2023.

Key Highlights of the Policy Announcement

Repo Rate: Unchanged at 6.5%.

Standing Deposit Facility (SDF) Rate: Retained at 6.25%.

Marginal Standing Facility (MSF) Rate and Bank Rate: Maintained at 6.75%.

Governor Das emphasized the dual focus of the central bank: controlling inflation and maintaining economic growth. "Price stability remains paramount, but fostering growth is equally critical," Das stated during the policy briefing.

Economic Backdrop

India’s economy is facing challenges from slowing growth and persistent inflation: 

      GDP Growth: The economy expanded at just 5.4% in the July-September quarter, the lowest in nearly two years, compared to an 8.1% growth during the same period in the previous fiscal year.

      Manufacturing and Mining: These sectors have been underperforming, contributing to the subdued GDP numbers.

The central bank is navigating a delicate balance, aiming to curb inflation without hampering growth.

Governor Das’s Final MPC Meeting This policy announcement comes as Governor Shaktikanta Das chairs the last MPC meeting of his current term, which concludes on December 10. The meeting began on December 4, with the policy decisions unveiled on December 6 at 10:00 am, as announced earlier by the RBI.

Inflation and Growth: RBI's Focus

Governor Das reiterated the RBI’s mandate of inflation control and economic stability, aligning with the Reserve Bank of India Act. He stated: “The goal is to keep prices stable while ensuring sustainable economic growth. Both are equally vital for a healthy economy.”

The RBI’s decision to hold rates steady reflects its cautious approach amid global uncertainties and domestic economic challenges.

What Lies Ahead?

With GDP growth slowing and inflationary pressures persisting, experts believe the RBI’s stance signals a wait-and-watch approach. The central bank is expected to monitor external risks and domestic economic indicators closely before making further policy adjustments.

For borrowers and businesses, this means continued high EMIs as the central bank prioritizes price stability over immediate rate cuts.