Analysis and Outlook on RBI's Latest Monetary Policy – October 9, 2024

 In its latest monetary policy announcement on Wednesday, October 9, 2024, the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.50%, as widely anticipated by the market. After raising the repo rate by 250 basis points between May 2022 and February 2023, the RBI has maintained the same policy rate for the 10th consecutive time. We are pleased to share our detailed analysis and outlook on the monetary policy.

Key Highlights:

1. Policy Measures: The repo rate remains unchanged at 6.50%.
2. GDP: The real GDP growth projection for FY25 is maintained at 7.2%.
3. Inflation: The inflation forecast for FY25 stays at 4.5%.
4. Policy Stance:
   • The RBI kept the policy rate at 6.50%, with a majority of 5:1 vote by the Monetary Policy Committee (MPC).
   • The MPC unanimously decided to shift the stance from “withdrawal of accommodation” to a “neutral” stance.

Our Outlook:

• The RBI’s decision reflects a balanced approach to supporting growth while addressing inflationary concerns.
• The emphasis on caution highlights the RBI’s awareness of the need to maintain macroeconomic stability.
• We expect a gradual approach to any future monetary easing, allowing for growth without sparking inflationary pressures.