RBI Signals Potential Rate Cut with Policy Shift
The Reserve Bank of India (RBI) maintained its key interest rate at 6.5% but shifted its policy stance to 'neutral,' hinting at potential rate cuts. This change follows signs of a slowing economy and a stable inflation forecast of 4.5% for 2024-25. Governor Shaktikanta Das emphasized commitment to inflation targets while supporting growth.
- Country:
- India
The Reserve Bank of India (RBI) decided to maintain its key interest rate at 6.5% during its latest policy meeting but introduced a significant shift by adopting a 'neutral' stance, hinting at future rate cuts. The move comes amidst signals of a slowing economy and attempts to balance inflation control with growth support.
This policy adjustment marks the first since June 2019, moving from a 'withdrawal of accommodation' posture due to easing food inflation and stable core inflation. The RBI continues to anticipate India's economic growth with private consumption and investment in alignment.
Governor Shaktikanta Das highlighted the RBI's unchanged inflation forecast of 4.5% for 2024-25 and GDP growth of 7.2%. He stressed the importance of maintaining flexibility in monetary policy, considering geopolitical and economic uncertainties, and addressed concerns about the aggressive lending behavior of NBFCs in the microfinance sector.
(With inputs from agencies.)
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