The Reserve Bank of India (RBI) has decided to keep the key policy repo rate at 6.5 percent, in line with economists' expectations. This decision comes as the RBI revises its economic growth forecast downward due to ongoing challenges in the economy.

To stimulate economic activity, the Monetary Policy Committee (MPC) has announced a reduction in the cash reserve ratio (CRR) by 50 basis points, to be implemented in two phases on December 14 and December 28. Aditi Nayar, chief economist at ICRA, has highlighted that the unchanged repo rate is a response to the Consumer Price Index (CPI) inflation exceeding the MPC's upper threshold of 6 percent. Nayar has also suggested that if CPI inflation falls below 5 percent by December 2024, there could be a repo rate cut in February 2025, indicating the potential for future monetary easing if inflation trends downward.