Reserve Bank of India’s (RBI) 51st Monetary Policy Committee meeting ended Wednesday October 09, 2024. The Central bank has kept the Repo Rate unchanged at 6.5% for the tenth straight time. The Decision was announced by RBI Shaktikanta Das in monetary policy statement. Meanwhile, the central bank of India has changed its policy stance of ‘withdrawal of accommodation’ to neutral.

The Meeting was kicked-off on Monday, October 07, 2024. The MPC has maintained status quo on 6.50% interest rate since February 2023.

Why Status Quo Is Maintained In RBI Monetary Policy Meeting?

Numerous economists and analysts have opined that rates are unchanged due to high vegetable inflation in the country. Albeit, the apex bank has been able to keep retail inflation below the set tolerance band of 4-6%. However, The policymakers couldn’t take the risk of slashing rates at the ongoing RBI MPC Meet as they are unlikely to take any chance. They are likely to wait for considerable fall in inflation before kick starting the rate cut cycle.

Meanwhile, In recent past, the western central banks  have slashed their interest rates. At the September 2024 Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) lowered interest rates by 50 basis points. This was the first primary rate cut in four years in the US due to progress on the Fed’s dual mandate. This had lowered the interest rate target to a range of 4.75% to 5%.

It is worth noting that if India’s central bank would have reduced the bank rate then EMIs on various types of loans would have reduced for borrowers in the country. However, if the rates were increased, it could increase the EMIs. The status quo will not much impact the borrowers as of now.