The Monetary Policy Committee (MPC) of the Reserve Bank of India is scheduled to hold its bi-monthly review on December 6. It is widely expected that the repo rate will remain unchanged at 6.5% for the eleventh consecutive time.

However, there is growing speculation among analysts that the cash reserve ratio (CRR), currently set at 4.5%, may be reduced as a measure to support the economy. This comes after a significant decline in GDP to 5.4% in the September quarter, which is the lowest in seven quarters.

The CRR is an important tool used by the RBI to control inflation and manage liquidity in the financial system. When inflation is high, the RBI typically increases the CRR to limit the funds available for lending, thereby helping to stabilize prices. On the other hand, a reduction in the CRR could potentially provide banks with more liquidity, stimulating lending and economic activity.