RBI Keeps Repo Rate at 6.5%, Changes Policy Stance to Neutral

In its latest monetary policy review, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) announced that the repo rate would remain steady at 6.5%, while altering its stance from ‘withdrawal of accommodation’ to ‘neutral.’ This change in stance suggests that the RBI now has greater flexibility in managing both inflation and economic growth, with a balanced approach.

The decision to keep the repo rate unchanged marks the fourth consecutive meeting where the MPC has opted to maintain the rate. Governor Shaktikanta Das highlighted that inflationary pressures, while easing, still pose a concern, necessitating a cautious approach. However, the shift to a neutral stance indicates that the central bank is prepared to make policy adjustments in either direction, depending on future economic developments.

The unchanged repo rate aligns with market expectations, given the inflation levels hovering near the RBI’s upper tolerance band. With global factors and domestic uncertainties in play, the central bank's decision reflects its aim to strike a balance between containing inflation and fostering sustainable economic growth.

The next few months will be critical for the RBI as it navigates volatile global conditions, potential inflation spikes, and the need to maintain economic stability.