The RBI’s six-member monetary policy committee kept the policy repo rate on hold at 6.50 per cent at its first meeting of FY25 as retail inflation remains above its 4 per cent target. It persisted with its “withdrawal of accommodation” stance.

Both these decisions, which were by a majiority of 5 out of 6 members, were widely anticipated by stakeholders, including economists, bankers and bond market players.

The MPC had last changed the repo rate in February 2023, when it upped it by 25 basis points from 6.25 per cent to 6.50 per cent. It has been on pause since then.

After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, it decided by a 5 to 1 majority to keep the policy repo rate unchanged at 6.50 per cent.

The MPC also decided by a majority of 5 out of 6 members to remain focused on the withdrawal of accommodation stance to ensure that inflation progressively aligns to the target, while supporting growth.

Market players expect the RBI to cut rates in the second half of FY25 when retail inflation is seen moving closer to the 4 per cent target.