The Reserve Bank of India left its key repo rate unchanged at 6.5% for an 11th straight policy meeting in December, in line with market expectations, as it continued a neutral policy stance in light of slowing economic growth.
Also, the central bank reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4% in order to boost liquidity ahead of advance tax outflows. It has been the first such move since April 2020.
Concurrently, the Reserve Bank of India launched the Secured Overnight Rupee Rate (SORR) in an attempt to further promote the interest rate derivatives market and improve the credibility of interest rate benchmarks.
Meanwhile, the RBI revised down its economic growth forecast for the fiscal year 2025 to 6.6% from 7.2%, as projected previously.
And, the central bank’s inflation forecast was revised up to 4.8% from 4.5% projected earlier.
The Indian Rupee advanced to 84.5040 per US Dollar immediately after the policy decision, but later erased gains to last trade at 84.6825 per US Dollar.
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