Reserve Bank of India Holds Repo Rate at 6.50% Amid Global Easing Cycle

The Reserve Bank of India held its benchmark repo rate at 6.50% at its October 2024 Monetary Policy Committee meeting, while changing its policy stance to 'neutral' from 'withdrawal of accommodation' as policymakers weighed persistently elevated food inflation against a global backdrop in which several major central banks had begun cutting rates.

Central banks in other economies, including New Zealand and Kenya, delivered rate cuts in the preceding days.

FOOD INFLATION

Food price inflation in India had remained elevated for much of 2024, driven by supply-side factors including vegetable price spikes and adverse weather events. The MPC said disinflation was 'still incomplete' and that it would remain 'unambiguously focused on a durable alignment of inflation with the target, while supporting growth'.

GLOBAL CONTEXT

The US Federal Reserve had begun its own easing cycle.

The RBI's mandate is to maintain price stability while keeping in mind the objective of growth, but the committee's October framing emphasised a 'durable alignment of inflation with the target' of 4%. Governor Shaktikanta Das and the MPC have consistently communicated that the last mile of disinflation — bringing food inflation down reliably — is the hardest to navigate.

For India's banking sector and corporate borrowers, the hold means that lending rates tied to the repo rate remain unchanged. The RBI published the decision through its standard press release channels, with the MPC resolution setting out the full reasoning.