The Reserve Bank of India (RBI) has decided to keep the benchmark interest rate unchanged at 6.50% during the Monetary Policy Committee (MPC) meeting held from August 6 to August 8. This marks the ninth consecutive time that the RBI has maintained the status quo on the repo rate. RBI Governor Shaktikanta Das announced the decision, stating that the MPC will continue with the policy stance of ‘withdrawal of accommodation’.
Bandhan Bank Chief Economist and Head of Research Siddhartha Sanyal noted that the central bank’s decision was not surprising, as it reflects a commitment to disinflation without a rush to cut rates. The RBI’s consistent policy provides a predictable environment for both homebuyers and developers. Achala Jethmalani, an economist at RBL Bank, emphasized that stable interest rates help in maintaining manageable EMI payments for homebuyers, making property ownership more accessible.
Despite the RBI’s steady stance, equity benchmark indices closed in negative territory. The BSE Sensex fell by 581.79 points to 78,886.22, and the NSE Nifty50 declined by 180.50 points to close at 24,117.
RBI’s stable monetary policy stance
The RBI’s projection of 7.2% GDP growth for FY25 indicates a positive yet cautious outlook for the Indian economy. Ajay Kumar Srivastava, Managing Director & CEO of Indian Overseas Bank, referred to the RBI’s measures as well-balanced, highlighting the need for stability amid global financial uncertainties. In a significant development, the RBI proposed the introduction of ‘Delegated Payments’ in UPI, which will allow a primary user to authorize another individual to make transactions up to a specified limit.
This feature aims to enhance convenience and inclusivity in digital payments, especially in rural areas where access to banking facilities is limited. A majority of the six-member monetary policy committee (MPC) voted to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 percent. Additionally, the committee decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns to the target while supporting growth.
The decision marks the second consecutive meeting where two MPC members have dissented from the majority decision. Despite the dissent, the committee’s overarching focus remains on maintaining the current stance to balance inflation control and economic growth.
- News18.”RBI MPC Meeting Highlights: ‘Stubborn’ Inflation Stops MPC To Change Repo Rate From 6.5%”.
- Reuters.”Expert views on Indian central bank’s policy decision”.
- EconomicTimes.”Two MPC members dissent for a second time in a row”.