December 6, 2024: In its latest monetary policy review on December 6, 2024, the Reserve Bank of India (RBI) decided to maintain the repo rate at 6.5%, marking the 11th consecutive time the rate has remained unchanged at this level. Along with this, the central bank reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4%, aiming to provide greater liquidity to the banking system.

The RBI’s decision comes amid rising inflation and slower economic growth. Inflation surged to 6.2% in October 2024, exceeding the central bank’s tolerance limit, while GDP growth for the July-September quarter slowed to 5.4%. These figures have raised concerns about the overall pace of India’s economic recovery, despite the RBI’s efforts to balance inflation control with growth support.

This policy review is likely to be the final one under the leadership of RBI Governor Shaktikanta Das, whose term is set to end later this month. Governor Das, who has been at the helm since 2018 and received an extension in 2021, has yet to announce whether he will continue in office after his current term ends.

Governor Das also urged banks to address the issue of inoperative accounts and unclaimed deposits, encouraging greater financial inclusion and efficiency in the banking sector. Additionally, he announced that the RBI would begin using podcasts to communicate key financial information to the public, marking a shift towards more accessible communication methods. Another important development is the RBI's decision to link foreign exchange retail platforms with the Bharat Connect platform of the National Payments Corporation of India (NPCI), aiming to improve the integration of digital financial services.

The decision to maintain the repo rate at 6.5% and reduce the CRR was welcomed by many, particularly in the real estate sector. Mohit Malhotra, Founder and CEO of NeoLiv, stated that the stability in interest rates would have a positive impact on the real estate market, boosting buyer confidence and making homeownership more accessible. Malhotra further expressed hope that the move would encourage further investment in the sector, contributing to overall economic growth.

As the RBI continues to navigate the challenges posed by inflation and slower growth, all eyes will be on the central bank’s future policy moves and whether the current economic pressures will ease in the coming months.