The Reserve Bank of India (RBI) has announced that it has kept its repo rate – the rate at which it lends to banks – unchanged for the tenth consecutive time. This was stated at the conclusion of the Monetary Policy Committee (MPC) meeting that took place between October 7-9, 2024 in Mumbai.

The current repo rate remains unchanged at 6.50%. The RBI had last increased the repo rate in February 2023. In the current MPC meeting, however, the MPC unanimously changed its policy stance to ‘neutral’ which, according to experts, is an indication that the central bank may cut repo rates in the next meeting in December 2024.

“The MPC decided unanimously to change the stance to ‘neutral’ and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth,” RBI Governor Shaktikanta Das said in a statement.

The MPC is a six-member empowered committee constituted by the central government and comprises of the RBI Governor, a Deputy Governor, an officer of the RBI, an economist and two independent members appointed by the government. The first such committee came into existence in September 2016. It is entrusted with the responsibility of determining the policy repo rate required to achieve inflation targets.

All MPC members have one vote each, and in the event of a tie, the Governor has a second or casting vote. All members of the MPC are required to write a statement specifying the reasons for voting in favour of, or against the proposed resolution.

Early last month, the United States’ Federal Open Market Committee (FOMC) had cut its key interest rates by 50 basis points bringing it in the 4.75-5% range. This rate cut came four years after the last cut was made in March 2020, and 14 months after a policy pause where there were no rate hikes either. It was widely anticipated that the RBI would follow suit and either reduce repo rates or change its policy stance, paving the way for potential rate cuts in December 2024.

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