Interview Times 
BHUBANESWAR: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has opted to maintain the status quo on the repo rate, keeping it unchanged at 6.5%. This decision comes amidst global economic uncertainties, with RBI Governor Shaktikanta Das emphasizing the need for caution while highlighting India’s strong growth prospects. The central bank has retained its GDP growth forecast for FY25 at 7.2%.
During the MPC briefing, Das noted that inflation is expected to rise moderately in the third quarter (Q3) of this fiscal year, increasing to 4.8%. He mentioned that while inflation has been brought within the tolerance band, it remains a delicate situation. “The inflation horse has been brought to the stable within the tolerance band. We have to be careful about opening the gate,” he remarked.
The decision to hold rates steady came despite the recent 50 basis point rate cut by the US Federal Reserve. The RBI has shifted its monetary stance from “withdrawal of accommodation” to a more neutral approach, indicating a cautious outlook on inflation and global factors.
Das also reassured that the Indian rupee continues to be among the least volatile currencies, despite global challenges. In addition, he urged banks and Non-Banking Financial Companies (NBFCs) to focus on addressing inoperative accounts, mule accounts, and strengthening their cybersecurity measures.
The decision to maintain the repo rate was met with approval from financial experts, who believe the RBI’s cautious approach is prudent given current economic conditions. “While there were hopes for a rate cut in line with the US Fed, the RBI has prioritized key domestic indicators like inflation and financial stability,” said Suresh Darak, Founder of Bondbazaar.
He also pointed out the impact of global geopolitical developments, which have driven up oil prices and added to inflationary pressures. This, Darak suggested, was a key factor in the MPC’s decision to hold rates steady.
Over the past few weeks, India’s 10-year benchmark government securities (G-sec) yields have risen by about 10 basis points, reflecting the market’s response to these global challenges. However, experts remain optimistic, noting that if these issues prove temporary, there could be room for a rate cut in the next policy cycle.
