RBI MPC Dec 2024: Repo Rate Remains Unchanged, CRR Slashed; Here's What The Experts Have To Say

The six-member MPC panel opted to keep the Standard Deposit Facility (SDF) and Marginal Standing Facility (MSF) unchanged at 6.25 per cent and 6.75 per cent respectively

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday kept the status quo on key interest rates and decided to keep the repo rate unchanged at 6.5 per cent. The six-member MPC panel opted to keep the Standard Deposit Facility (SDF) and Marginal Standing Facility (MSF) unchanged at 6.25 per cent and 6.75 per cent respectively.

Additionally, the MPC also decided to slash the CRR (Cash Reserve Ratio) for banks by 50 basis points to 4 per cent. This metric represents the percentage of overall deposits banks are required to keep in cash with the RBI.

Reacting to the central bank’s monetary policy decision, experts said that this move will help add stability to the real estate market. Adhil Shetty, CEO, BankBazaar.com, noted, “Most home loans in India have floating interest rates. With no change in the repo rate, your EMIs are unlikely to rise for now. That’s welcome news for borrowers managing tight budgets. Banks are likely to keep lending rates stable. If you’re planning to buy a home or refinance your loan, this could be a good time to negotiate a better rate.”

The executive suggested consumers review their loan terms and consider refinancing if their interest rate exceeded the current market rate. “If you have extra funds, use them to prepay your loan. This helps lower your principal and reduces the total interest you’ll pay,” he said.

Kaushal Agarwal, co-founder and director, The Guardians Real Estate Advisory noted, “The RBI's decision to keep the repo rate unchanged and lower the CRR shows strategic efforts to balance more cash flow with inflation control. Reducing the CRR to 4 per cent allows banks to lend more, which is a positive step for the real estate sector. Although a cut in the repo rate would have given an extra push to housing demand, the current steps still create favorable conditions for growth.”

Notably, the central bank also slashed its GDP growth forecast for the current fiscal year to 6.6 per cent. Agarwal stated that this revision shows that ‘we need to be hopeful but careful as the economy changes.’

Aamar Deo Singh, Sr. VP Research, Angel One Ltd, added that markets are expected to consolidate in the coming weeks driven by the decision of the MPC.

Akhil Puri, Partner, Financial Advisory, Forvis Mazars in India, stated that while the committee slashed the GDP growth numbers for the current fiscal year, it still reflected optimism. "Despite geopolitical tensions and financial uncertainties, the global economy has shown resilience, which adds a layer of optimism. The RBI's neutral stance highlights its commitment to achieving inflation targets while fostering long-term economic stability," he added.