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The year of the pause: - How RBI maneuvered its policy in 2024
India's benchmark interest rate, held steady at 6.5% since late 2018, remains unchanged as inflation control remains a key focus. Despite a 5.4% GDP growth slump in Q2 2024, the RBI prioritizes disinflation efforts, citing persistent food price pressures and supply-side challenges.
At 6.5%, the benchmark interest rate today is exactly where it was when former Reserve Bank of India governor Shaktikanta Das took charge in late 2018, and the year 2024 has intensified the debate over whether the central bank should maintain this rate — a level it has held for almost two years. India's real GDP growth slumped to a seven-quarter low of 5.4% in the July to September 2024 quarter. Concerns about slowing growth in Asia’s third-largest economy have emerged in recent comments from the Indian government, which stated that high borrowing costs are hurting the economy.
Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal have both called for lower borrowing costs in recent months, and some economists have said the RBI could be doing more to encourage lending to boost growth.
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