RBI Monetary Policy Meeting Dec 2024: Key Highlights and Updates
The Reserve Bank of India (RBI) conducted its latest bi-monthly Monetary Policy Committee (MPC) meeting in December 2024. Governor Shaktikanta Das announced several crucial measures and projections to address current economic challenges while maintaining stability. Here’s a detailed breakdown:
To tackle liquidity concerns, the Cash Reserve Ratio (CRR) was reduced by 50 basis points to 4%. This move aligns with the RBI’s neutral policy stance, aimed at ensuring economic stability without disruptive interventions.
The MPC decided by a 4-2 majority to maintain the repo rate at 6.5%. The Standing Deposit Facility (SDF) rate and the Marginal Standing Facility (MSF) rate were also retained at 6.25% and 6.75%, respectively. This cautious approach reflects the central bank’s focus on balancing inflation and growth.
The RBI revised the GDP growth forecast for FY25 to 6.6%, down from the earlier projection of 7.2%. Governor Das attributed the adjustment to weaker-than-expected Q2 growth and specific challenges in the manufacturing sector. Despite this, high-frequency indicators suggest potential stabilization ahead.
The RBI forecasted an inflation rate of 4.8% for FY25. Food inflation is expected to persist during Q3 but may ease from Q4 onward. Quarterly projections are as follows:
The Reserve Bank of India enhanced the collateral-free agriculture loans limit to Rs 2 lakh per borrower from the existing Rs 1.6 lakh. This aims to enhance financial support for farmers and boost credit availability in the sector.
The RBI proposed a new benchmark, the Secured Overnight Rupee Rate (SORR), to strengthen market-based pricing mechanisms and enhance transparency in monetary operations.
The RBI plans to launch podcasts as a communication tool to improve public engagement and transparency. This initiative reflects the central bank’s commitment to leveraging technology for better outreach.
To boost foreign investments, the RBI raised interest rate ceilings on FCNR-B deposits and increased FCNR deposit rates. These measures aim to attract higher foreign portfolio inflows, which have totaled $9.3 billion so far in FY25.
The RBI directed banks to segregate unclaimed deposit accounts using Direct Benefit Transfers (DBT). This step aims to ensure transparency and efficiency in beneficiary identification while facilitating the seamless flow of DBT funds.
Private consumption growth slowed to 6% in the September quarter from 7.5% earlier, reflecting a decline in urban demand. Fixed investment growth also dipped to 5.4%. However, government consumption rebounded by 4.4%, driven by election-related activities.
The Monetary Policy Committee comprises six members:
These measures and insights reflect the RBI’s balanced approach to addressing economic challenges while fostering growth and stability. The central bank continues to monitor developments closely, ensuring proactive and effective policymaking.
| Why in News | The Reserve Bank of India (RBI) conducted its bi-monthly Monetary Policy Committee (MPC) meeting in December 2024. |
|---|---|
| GDP Growth Forecast (FY25) | 6.6% (down from 7.2%) |
| Cash Reserve Ratio (CRR) | 4% (reduced by 50 bps) |
| Repo Rate | 6.5% (unchanged) |
| Standing Deposit Facility (SDF) Rate | 6.25% |
| Marginal Standing Facility (MSF) Rate | 6.75% |
| Inflation Projection (FY25) | 4.8% |
| Agricultural Loan Collateral Limit | Rs 2 lakh (up from Rs 1.6 lakh) |
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