The Reserve Bank of India's Monetary Policy Committee (MPC) announced its final decision on key rates today. The MPC, chaired by Governor Sanjay Malhotra, decided to reduce the repo rates by 25 bps to 5.25 per cetn.
With inflation muted and growth at a six‑quarter high, pressure is building, but the RBI was expected to still choose caution over action. The panel not only unanimously slashed the key rates, but also continued to adopt a 'neutral' stance on the economy.
The MPC began its three‑day deliberations on Wednesday at a defining moment for the economy. India’s growth accelerated to its fastest pace in six quarters, while inflation eased to the lowest monthly reading on record. This rare combination prompted renewed market speculation that the RBI might resume monetary easing after holding rates steady for four consecutive meetings.
At its October review, the MPC kept the repo rate unchanged at 5.5 per cent, with Governor Sanjay Malhotra noting that inflation had "moderated sharply", providing comfort but not yet enough reason to shift stance.
The December meeting, however, arrived with a more favourable macro backdrop, raising expectations that a 25 bps rate cut might finally be on the table.
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