RBI MPC Meeting: Key Takeaways from December 2024 Policy Update

The Reserve Bank of India (RBI) concluded its final Monetary Policy Committee (MPC) meeting for 2024, announcing several critical decisions. The key highlight remains the unchanged repo rate at 6.5%, maintaining the central bank’s stance on stabilizing inflation while supporting growth.

Major Highlights:

1. Repo Rate Steady: For the 11th consecutive time, the repo rate stays at 6.5%, with two MPC members opposing the decision. The last adjustment occurred in February 2023.
2. Inflation Outlook: The RBI projects inflation at 5.4% for FY24, emphasizing the need for a disinflationary policy to align with the 4% target. Key risks include volatile food prices and supply-side shocks.
3. The RBI revised the real GDP growth projection for FY24 upward to 7% from 6.5%. It also slightly reduced the forecasts for Q3FY25 and Q4FY25 to 6.5% and 6%, respectively, citing festive recovery and increased rural demand as positive contributors.
4. Liquidity Measures: The Cash Reserve Ratio (CRR) remains steady, but liquidity management measures like the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) will now operate even on weekends and holidays to support banks.
5. Enhanced UPI and e-Mandate Limits: UPI transaction limits for educational and healthcare payments have increased from Rs.1 lakh to Rs.5 lakh, while e-mandates for recurring transactions now allow up to Rs.1 lakh without additional authentication.
6. The RBI announced new AI-based fraud prevention models and launched podcasts to improve policy communication, aiming to bolster public engagement and trust.

Governor Shaktikanta Das highlighted the delicate balance between inflation management and economic growth, reiterating the RBI’s commitment to maintaining stability in the face of global and domestic uncertainties. The next MPC meeting is scheduled for February 2025.