RBI MPC Meeting Announcements: The Reserve Bank of India (RBI) has maintained the repo rate at 6.5 percent in its October monetary review (MPC) meeting. For the 10th consecutive time, no change has been made in the repo rate. It was expected that RBI would not cut the repo rate in October also given global factors, rise in crude oil and domestic growth prospects as well as rising inflation this year. According to RBI Governor Shaktikanta Das, after evaluating macroeconomic conditions and future outlook, 5 out of 6 members of the MPC decided to maintain the repo rate at 6.5%.

What will be the impact ( Repo Rate )

By not reducing the repo rate, loans will not become cheaper. As a result, the EMI of the loan takers will not decrease. But since the loan will not become expensive, the EMI will also not increase. However, the MPC has changed the stance of monetary policy from 'withdrawal of accommodation' to 'neutral' to focus on growth.

Presented important GDP data

• Real GDP grew by 6.7% in the first quarter
• GDP estimated to be 7.2% for FY 2025
• Inflation is projected to be 4.5% for FY 2025
• RBI Governor Das has indicated that the manufacturing sector is showing signs of a slowdown
• CPI inflation estimated at 4.1% in the second quarter
• CPI inflation is expected to rise to 4.8% in the third quarter
• CPI inflation is estimated at 4.2% in the fourth quarter
• CPI inflation is estimated at 4.3% in Q1FY26

RBI's decision disappoints those paying expensive EMIs

Voice of Banking founder Ashwani Rana said that no change was made in the repo rate in the Reserve Bank meeting. For the fifth consecutive time in 2024, the Reserve Bank did not make any change in the repo rate. The Reserve Bank is making efforts to control inflation but according to the Reserve Bank, food inflation is higher than the target. Therefore, the repo rate will remain at 6.50 percent for now.

Bank customers waiting for the reduction in repo rate have been disappointed. After the reduction in interest rate by the Federal Reserve, it was thought that the Reserve Bank would also change the repo rate and those paying high EMIs would get a gift before the festivals. But this has not happened.

Atul Monga, CEO and co-founder of Basic Home Loan, says that RBI's decision to adopt a 'neutral' stance indicates a balanced approach towards future monetary policy. Although it does not guarantee a reduction in home loan interest rates, it allows the Central Bank to adjust rates based on future inflation trends and economic performance. If inflation remains under control and the economic situation remains stable, there is every possibility that RBI may reduce repo rates in the upcoming meetings. As the industry estimates, if this happens, the EMI of borrowers will be reduced by December or early 2025, although it can also depend on the bank. If the rates are reduced by RBI in the coming time, new borrowers will get the benefit of a favorable environment.

Food inflation pressure may reduce

Governor Das said that food inflation pressure may ease due to favorable conditions due to Kharif sowing and good soil moisture. Apart from this, he said that it seems that core inflation has reached its lowest level.

Shaktikanta Das said that domestic growth has maintained its momentum, and the global economy has remained resilient since our last meeting. However, downside risks remain due to geopolitical conflicts, financial market volatility, and increased public debt. The good thing is that there are signs of improvement in global trade.

Inflation tension remains

Shaktikanta Das said that if the recent increase in food and metal prices persists, it could increase the risk of Consumer Price Index (CPI) inflation. Core inflation is expected to remain under control.

The central bank emphasized that it has made significant efforts to rein in inflation, effectively bringing it back within the target range. Das said the Indian rupee remains the least volatile among other currencies.

UPI payment limit increased

To promote the Unified Payment Interface (UPI), the transaction limit will be increased from Rs 5,000 to Rs 10,000. The aim of this increase is to facilitate large transactions, making the digital payment system more accessible and convenient for users.