Mumbai

Policy priority should be on restoring the inflation-growth balance, said Shaktikanta Das, former Reserve Bank governor, while voting for a status quo on the short-term lending rate earlier this month.

Das, and three other members of the rate-setting panel – Monetary Policy Committee – voted in favour of keeping the repo rate at 6.25 per cent, while the other two members favoured reduction in the rate.

In its December bi-monthly monetary policy, the Reserve Bank of India (RBI) kept repo rate unchanged but cut the cash reserve ratio that banks are required to park with the central bank, as it did a balancing act between inflation management and supporting economic growth.

With India's GDP seeing a sharper-than-anticipated dip in the July-September period to 5.4 per cent – its slowest pace in seven quarters – inflation on the uptick and rupee under pressure, the RBI had few choices to make.

"The policy priority at this critical juncture has to be on restoring the inflation growth balance. The fundamental requirement now is to bring down inflation and align it with the target," Das said as per the minutes of the December 4-6 MPC meeting that were released by the RBI on Friday.

RBI may delay rate cut to Apr 2025: Yes Bk

The RBI may postpone the beginning of its rate cut cycle to April 2025 because of the Federal Reserve's shift towards a more hawkish monetary stance, says a research report by Yes Bank.

It said, "Given INR weakness and developing volatility in financial markets, we see the start of rate cut cycle to shift to April 2025". The report highlighted that the Federal Reserve recently reduced its policy rate by 25 basis points (bps). However, the forward guidance has scaled down the projected rate cuts for 2025 to just 50 bps.