Governor Explains Why RBI Shifted Its Stance To 'Neutral' From 'Withdrawal Of Accommodation'

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) maintained the repo rate at 6.5% during its latest meeting. While this decision wasn't unanimous, with one member favoring a rate cut, the committee agreed to shift its policy stance from "withdrawal of accommodation" to "neutral." The primary reason for this change is the balanced outlook on inflation and growth. RBI Governor Shaktikanta Das highlighted the progress made in controlling inflation, though disinflation remains incomplete. This neutral stance allows the MPC greater flexibility to adjust monetary policy as needed, giving the committee room to either raise or lower rates depending on how inflation trends evolve in the coming months. Ongoing risks such as global geopolitical tensions, market volatility, weather unpredictability, and rising food and metal prices also played a role in the decision to remain cautious. By keeping the policy rate unchanged at 6.5%, the MPC aims to strike a balance between controlling inflation and supporting economic growth, ensuring that any future rate adjustments can be made without disrupting these goals.