07:26 AM EDT, 10/10/2024 (MT Newswires) -- The Reserve Bank of India kept the policy repo rate unchanged at 6.5% on Wednesday, as expected, but changed its stance from 'withdrawal of accommodation' to 'neutral', noted HSBC.

The RBI further explained its intent to "remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth." The Indian central bank also said that a neutral stance will give "greater flexibility and optionality" in monetary policymaking.

Five of the six MPC members voted for a pause in rates. The new MPC member, Nagesh Kumar, voted for a cut. All six members voted for the change in stance.

While the RBI will be carefully analyzing the "inflation hump" expected in the September print, it expects one year-ahead inflation at target levels of about 4%, pointed out the bank.

The sequencing is important; the stance was changed on Wednesday and HSBC believes rate cuts will begin in the next meeting. The bank expects 50bp in rate cuts over December and February, taking the repo rate to 6.0%