RBI MPC Meet:
Key takeaways from governor Sanjay Malhotra’s address
Apr 9, 2025
Synopsis
The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 6%, changing its stance to 'accommodative' to stimulate economic growth. Led by Governor Sanjay Malhotra, the Monetary Policy Committee's decision was unanimous amidst global uncertainty and trade tensions. The SDF rate is now 5.75%, and the MSF rate is 6.25%.
The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points, bringing it down to 6%, after a three-day meeting of the Monetary Policy Committee (MPC) held from 7 to 9 April 2025.
This was the 54th MPC meeting, chaired by Governor Sanjay Malhotra.
All members of the committee: Dr Nagesh Kumar, Saugata Bhattacharya, Prof Ram Singh, Dr Rajiv Ranjan, and M Rajeshwar Rao, unanimously voted in favour of the rate cut.
As a result:
The Standing Deposit Facility (SDF) rate is now 5.75%
The Marginal Standing Facility (MSF) and Bank Rate stand at 6.25%
The RBI also changed its policy stance from 'neutral' to 'accommodative'.
Why the rate cut?
The decision comes as global economic uncertainty increases due to recent trade tariff tensions, which have affected financial markets worldwide. The RBI said, "The global economic outlook is fast changing. Recent tariff measures have created new headwinds for growth and inflation."
Falling crude oil prices, a dip in the dollar index, and stock market sell-offs have added to the worries.
Growth outlook
India’s GDP growth for 2025-26 is projected at 6.5%, slightly down due to global trade challenges. Here’s the quarter-wise forecast:
Q1: 6.5%
Q2: 6.7%
Q3: 6.6%
Q4: 6.3%
The RBI said growth will be supported by:
Rural and urban demand
Government capital spending
Strong corporate and banking balance sheets
However, exports may suffer due to global slowdown, though services exports are expected to remain steady.
Inflation
Inflation has dropped sharply:
Headline CPI inflation went down from 5.2% in December 2024 to 3.6% in February 2025
Food inflation reached a 21-month low of 3.8%
Fuel inflation stayed in deflation
The outlook for food inflation is looking good, thanks to:
A record wheat harvest
Strong pulse and kharif arrivals
A normal monsoon expected
CPI inflation for 2025-26 is projected at 4%, with quarterly figures as:
Q1: 3.6%
Q2: 3.9%
Q3: 3.8%
Q4: 4.4%
The RBI said inflation risks are evenly balanced, but global uncertainty and weather changes may still pose risks.
The next MPC meeting is scheduled for 4 to 6 June 2025.
[The Economic Times]
