Rate-sensitive sectors like banking, auto, and real estate displayed mixed reactions on December 6 after the Reserve Bank of India (RBI) cut the cash reserve ratio (CRR) by 50 basis points to 4.5%, easing growth concerns. The RBI, however, kept the repo rate unchanged at 6.5%, in line with expectations, maintaining a “neutral” policy stance.
The Nifty Bank and Auto indices gained 0.3% each following the RBI’s monetary policy announcement, while the Nifty Realty index declined by 0.6%.
The Monetary Policy Committee (MPC) voted 4-2 to maintain the repo rate at 6.5%, a level unchanged since February 2023. The Standing Deposit Facility (SDF) rate also stayed at 6.5%, and the Marginal Standing Facility (MSF) rate was at 6.75%.
RBI Governor Shaktikanta Das highlighted concerns over high food inflation, which is expected to persist in Q3FY25 before easing in Q4FY25. He noted its negative impact on consumer spending and overall economic activity.
On the GDP front, the RBI revised FY25 growth projections to 6.6% from 7.2%, citing weaker-than-expected Q2 growth, which hit a seven-quarter low of 5.4% year-on-year. Growth forecasts for Q3FY25 were trimmed to 6.8% from 7.4%, while Q4FY25 was lowered to 7.2% from 7.4%.
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