RBI keeps repo rate unchanged at 6.5%, changes stance to ‘neutral’

India's benchmark interest rates remain unchanged for now, but the Reserve Bank of India's rate-setting panel has changed the policy stance to neutral, signalling the possibility of the first rate cut in the December policy.

Five of the six members of the monetary policy committee voted to keep the repo rate unchanged at 6.5 per cent, and all six voted to shift policy stance to neutral from withdrawal of accommodation for the first time in two years, RBi Governor Shaktikanta Das said.

This is in line with a Mint poll of economists which revealed that 9 out of 10 economists expected rates to remain unchanged.

The RBI's three-day monetary policy committee (MPC) meeting was held from October 7-9. Das will also hold a press conference at noon today.

A ‘neutral’ stance suggests that the central bank can lower or raise the interest rate. This shows that the policy priority is equal on both fronts — inflation and growth.

Notably, in its last nine consecutive meetings since February 2023, the central bank has kept the repo rate unchanged at 6.50 per cent, with a view to balance inflation and economic growth.

The MPC also retained India's FY25 GDP growth and inflation forecast at 7.2 per cent and 4.5 per cent, respectively.

RBI Panel Has New Members

Notably, this is the first meeting of the six-member RBI MPC after half the members were changed last week.

Earlier in October, the Centre appointed three new members to the RBI's monetary policy panel. These three external members of the six-member panel are routinely nominated and appointed by the central government.

The new members are Saugata Bhattacharya, economist; Dr Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development; and Professor Ram Singh, Director, Delhi School of Economics, University of Delhi. They join RBI Governor and MPC Chairperson Das, Rajiv Ranjan, serving as Executive Director, and Michael Debabrata Patra, as the Deputy Governor.

Bhattacharya, Kumar, and Singh, replace Shashanka Bhide, Ashima Goyal, and Jayanth R Varma as the external members.