The Monetary Policy Committee of the Reserve Bank of India decided to keep policy rates unchanged at 6.5% for the 11th straight instance on Friday, December 6. The decision was taken with a majority of 4:2.

Dr. Nagesh Kumar and Professor Ram Singh had voted to reduce the policy repo rate by 25 basis points.

A CNBC-TV18 Citizens MPC, with a majority of 4:1 had voted that the MPC will leave interest rates unchanged this time around as well.

The MPC also left the Standard Deposit Facility (SDF) and the Marginal Standing Facility (MSF) rates unchanged in its most recent policy decision.

However, the Reserve Bank of India announced a 50 basis points cut to the Cash Reserve Ratio for banks. This is the first instance after March 2020 that the CRR has been cut by the central bank. CRR now stands at 4% from 4.5% earlier and Governor Shaktikanta Das said that the cut in CRR will lead to an infusion of ₹1.16 lakh crore as liquidity into the system.

The CRR will be cut in two equal tranches of 25 basis points each, once from the fortnight beginning December 14, 2024 and the other starting December 28, 2024.

The governor also said that the reduction in CRR is in line with the central bank’s “neutral” stance.

Analysts expected that a cut in CRR could release up to ₹1 lakh crore in systemic liquidity.

The RBI has also maintained its stance at “neutral” which it had revised during the previous policy in October. The decision to maintain stance at “neutral” was taken unanimously.

In addition, the RBI revised its financial year 2025 GDP forecast lower to 6.6% from 7.2% earlier. On the other hand, the financial year inflation forecast was revised higher to 4.8% from 4.5% earlier.

The minutes of the latest policy decision will be released on December 20.