RBI is ready with its decision on the key interest rate to be announced by 10:00 AM on December 6, 2024, after the three-day monetary policy committee. The decision was due over concerns with rampant elevated inflation and sluggish growth in GDP. 

According to the experts, the RBI would maintain the repo rate- or short-term lending rate-pegged at 6.5%. The rate has stayed at this level since February of 2023. But many analysts believe that the RBI central bank may change the CRR as a means to control liquidity in light of the mixed signals from the economy. 

The six-member MPC, while beginning its meeting on 4 December 2024, is chaired by RBI Governor Shaktikanta Das, who is presiding over his last MPC meeting before the conclusion of his term on 10 December. This MPC is required to set bi-monthly monetary policy and decisions in respect of the repo rate, CRR, and other financial measures. 

Decisions and moves by RBI are closely watched by financial markets and all economic stakeholders, with an added motivation to balance inflation control with promoting economic growth. The government has set a target for RBI to make inflation through the consumer price index stay around 4% with a permissible margin of 2% on either side. Consistent with this mandate, the RBI has adjusted rates several times since mid-2022, upping the repo rate by as much as a cumulative 250 basis points between May 2022 and February 2023 in response to inflationary pressures. 

I expect that the repo rate decision will be a no-change decision, but market participants would look for any changes in the future policy direction. Analysts fancy adjusting the CRR position under such conditions with an aim to manage banking system liquidity. There would be important insights regarding the RBI’s stance on inflation and economic growth and maintaining financial stability in the country into its next announcement.