On October 9, 2024, the Reserve Bank of India (RBI) announced it would maintain its key interest rate at 6.50%, marking the tenth consecutive policy meeting without a change. However, the RBI's Monetary Policy Committee (MPC) altered its policy stance to 'neutral', indicating potential interest rate cuts in response to early signs of an economic slowdown.
The MPC, comprising three RBI members and three external members, voted five-to-one to keep the benchmark repurchase rate unchanged. This shift to a neutral stance is the first since June 2019 and aligns with trends observed in other global central banks adjusting their monetary policies.
Chief Economist Devendra Kumar Pant noted that while the decision to hold rates was anticipated, the change in stance was unexpected. He highlighted risks to inflation stemming from adverse weather and rising commodity prices influenced by global political dynamics.
Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, expressed that the RBI's move was in line with expectations, suggesting a possible rate cut of 25 basis points by December, although any easing may be limited and data-driven.
This policy shift by the RBI could have significant implications for the Indian economy and may influence global markets, reflecting broader trends in monetary policy adjustments worldwide.