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The Reserve Bank of India (RBI) held its benchmark interest rate steady at 6.25% in December, prioritizing inflation control amid slowing economic growth. Outgoing Governor Shaktikanta Das emphasized the need to balance inflation and growth, while two MPC members favored a rate cut to stimulate the economy.
Policy priority should be on restoring the inflation-growth balance, said Shaktikanta Das, former Reserve Bank governor, while voting for a status quo on the short-term lending rate earlier this month. Das, and three other members of the rate-setting panel -- Monetary Policy Committee -- voted in favour of keeping the repo rate at 6.25 per cent, while the other two members favoured reduction in the rate.
In its December bi-monthly monetary policy, the Reserve Bank of India (RBI) kept repo rate unchanged but cut the cash reserve ratio that banks are required to park with the central bank, as it did a balancing act between inflation management and supporting economic growth.
With India's GDP seeing a sharper-than-anticipated dip in the July-September period to 5.4 per cent -- its slowest pace in seven quarters -- inflation on the uptick and rupee under pressure, the RBI had few choices to make.
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