Steady repo rate at 6.5% aligns with market expectations: NSE Macro Review

The Reserve Bank of India’s (RBI) Monetary Policy Committee’s (MPC) decision to keep the policy repo rate steady at 6.5 per cent aligns with market expectations, continuing the trend that has been observed over the past several meetings.

NSE Macro Review stated, “The RBI expectedly kept the policy repo rate unchanged at 6.5 pc, retaining the “withdrawal of accommodation” stance with a 4:2 majority.”

The Standing Deposit Facility (SDF) rate and the Marginal Standing Facility (MSF) rate also remain unchanged at 6.25 per cent and 6.75 per cent, respectively. This consistent stance un

derscores the committee’s commitment to managing inflation while supporting sustainable growth.

For the first time in eight policy meetings, the committee witnessed two dissenting votes. Professors Jayant Varma and Ashima Goyal voted for a 25 bps cut and a shift to a ‘neutral’ stance, reflecting growing divergence within the committee on the future path of monetary policy.

Despite these differences, the majority’s decision reflects a cautious approach to inflation management amidst ongoing economic uncertainties.

The RBI has retained its inflation forecast for FY25 at 4.5 per cent, maintaining a cautious outlook despite a steady downward trend in headline inflation since February 2024.

Core inflation, excluding volatile components like food and fuel, has fallen to its lowest in recent years.