RBI Keeps Repo Rate Unchanged, Reduces CRR to Boost Liquidity and Economic Growth

The Reserve Bank of India (RBI) made some important decisions on December 6, 2024. The RBI kept the repo rate at 6.5%, which means it will not change the cost of loans for people. This is the 11th time in a row that the RBI has decided to keep the rate the same.

The RBI also reduced the Cash Reserve Ratio (CRR) from 4.5% to 4%. This means that banks will have more money to lend to people and businesses. The CRR is the amount of money that banks must keep with the RBI, and they don’t earn interest on this money. With more money available to lend, banks can help support the economy.

The RBI also changed its predictions. It lowered the growth estimate for the economy from 7.2% to 6.6% and raised the inflation estimate to 4.8% for this year. However, they decided to keep the policy stance "neutral," meaning no big changes in interest rates for now.

For people with loans, this means their monthly payments (EMIs) will not go up. But, the CRR cut could lead to slightly lower interest rates on savings accounts and deposits.