RBI Monetary Policy Meeting Highlights - December 2024
Discover the key highlights from the RBI's December 2024 monetary policy meeting, including the unchanged repo rate of 6.50%, a 50 basis points cut in the cash reserve ratio to 4%, and the revised FY25 GDP outlook. Learn how these decisions aim to enhance liquidity and support economic growth.
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The Reserve Bank of India (RBI) announced the outcomes of its latest Monetary Policy Committee (MPC) meeting, led by Governor Shaktikanta Das, on December 6, 2024. The central bank has maintained the repo rate at 6.50% for the fifth consecutive meeting, signaling its continued focus on price stability and economic growth amid global uncertainties.
In a move aimed at injecting liquidity into the banking system, the RBI reduced the Cash Reserve Ratio (CRR) by 50 basis points, bringing it down to 4%. This measure is expected to provide additional liquidity of approximately ₹1.4 lakh crore to the banking sector, boosting credit flow to various sectors of the economy.
The RBI also revised its GDP growth outlook for the fiscal year 2024-25 downward to 6.6% from its previous projection of 6.8%. Governor Das attributed this revision to the impact of slowing global growth, geopolitical tensions, and domestic challenges. He emphasized the need for structural reforms and targeted policy interventions to sustain economic momentum in the coming quarters.
On the inflation front, the RBI retained its target at 4% for the medium term, with a tolerance band of ±2%. The central bank noted a moderation in inflationary pressures due to easing food and fuel prices but cautioned against potential risks arising from global commodity price volatility.
In his address, Governor Das highlighted the resilience of India’s banking and financial sector, lauding it as a pillar of strength for the economy. He stressed the importance of maintaining adequate liquidity while ensuring financial stability.
Key policy measures announced during the meeting include enhanced support for priority sectors, particularly agriculture and micro, small, and medium enterprises (MSMEs). The RBI also unveiled plans to simplify compliance requirements for fintech and digital payment platforms to foster innovation in the financial technology space.
Market reactions to the policy announcements were mixed, with the benchmark indices opening on a flat note. Analysts see the RBI's decisions as a balanced approach to supporting economic growth while keeping inflationary risks in check.
The central bank’s cautious yet proactive stance underscores its commitment to navigating the complexities of a challenging global and domestic economic landscape. As the fiscal year progresses, all eyes will remain on the RBI’s future actions to steer the Indian economy toward sustainable growth.