RBI Maintains Status Quo, No Rate Cut: RBI Monetary Policy

Despite popular expectation of another rate cut, the Reserve Bank of India (RBI), led by Governor Shaktikanta Das, has decided to maintain status quo and did not announce a repo rate cut thereby ending the five consecutive interest rate cut this year. 

The current repo rate, which is the rate at which commercial banks lend money from RBI, stands at 5.15 per cent.

A cut in repo rate is also a big booster for the large industrial sector as bulk loans can be availed at lower interest rates. The price of commodities, especially real estate and vehicles, also fall when key lending rates are slashed.

Several analysts surveyed ahead of the key six-member Monetary Policy Committee (MPC) meeting on December 5 had said another interest rate cut was very much on the cards to fuel growth, particularly in the backdrop of a 16-month high of 4.62 per cent in October due to higher prices of food commodities, surpassing RBI's medium-term target of 4 (+/- 2) per cent for the first time since July 2018.

A cut in repo rate means cheaper loans due to lower interest rates. The beneficiaries include consumers having home loans, car loans etc. A cut tends to boost demand for new homes and vehicles.

The central bank has cut key lending rate by 135 basis points since January 2019.

Detailed Report to follow