RBI MPC Meeting Highlights: Central Bank Announces 25 Bps Rate Cut, GDP Growth Projected At 6.5% For FY26
RBI MPC April 2025 Highlights: Follow this space for all the latest news and updates on the RBI MPC meet, chaired by Governor Sanjay Malhotra, which will reveal its final decision on key rates today
Background
RBI MPC April 2025 Highlights: All eyes are on the Reserve Bank of India (RBI) as Governor Sanjay Malhotra prepares to announce the central bank’s first monetary policy decision of...More
Deepak Ramaraju, Senior Fund Manager, Shriram AMC, noted that the Reserve Bank of India’s (RBI) decision to shift to an accommodative stance and cut the repo rate by 25 basis points is a welcome move amid global economic uncertainties. “This signals the central bank's proactive approach to support growth and liquidity in the economy, especially in light of potential headwinds such as escalating trade tensions and counter tariffs.”
Gaura Sen Gupta, Chief Economist at IDFC FIRST Bank, said, "We expect the rate cut cycle to be deeper post the stance change to accommodative. We now see another 50bps cut in the remainder of 2025 v/s earlier expectation of 25bps. Another factor is the comfort on inflation with RBI seeing durable alignment of headline inflation with the 4 per cent-target in FY26. Despite the downward revision in FY26 GDP estimate to 6.5 per cent from 6.7 per cent, we continue to see downside risk from tariff tensions. In our assessment downward impact of growth from tariffs is 0.5 per cent, which hasn’t been baked into the GDP estimate."
DK Srivastava, Chief Policy Advisor, EY India, said, “RBI’s second successive reduction of policy rate of 25 basis points and change of stance to accommodative, signals its willingness to safeguard India’s GDP growth prospects, ensuring that it does not fall below 6.5 per cent inspite of the ongoing global tariff turmoil. The RBI recognises that global uncertainties will have an adverse impact on India’s growth prospects. However, a periodic injection of monetary stimulus supported by maintenance of adequate liquidity conditions and healthy domestic economic conditions will help India maintain a reasonably high GDP growth in the presence of a likely global growth slowdown.”
Santosh Agarwal, CEO, Paisabazaar, said, “The MPC’s decision to change the monetary policy stance from neutral to accommodative marks the start of a more supportive monetary cycle for both existing and prospective borrowers.”
“The reduction in the repo rate, backed by the favourable liquidity conditions in the banking sector, should help banks further reduce the rates of their FDs and other liability-side fund sources. This should result in quicker reduction of cost of funds for the banks and thereby, allow a more effective transmission of policy rate cuts in loans linked to internal benchmarks,” Agarwal said.
Parijat Agrawal, Head of Fixed Income at Union Asset Management, said, "In accordance with our expectations, the Monetary Policy Committee (MPC) reduced the policy rate by 25 basis points and changed the stance to accommodative. The inflation forecast for this fiscal year has been adjusted to align with the Reserve Bank of India's target of 4 per cent which is positive development, which allows for additional room for further rate reductions. Considering the global uncertainties and revised lower GDP projections from 6.7 per cent to 6.5 per cent, it is anticipated that there will be adequate policy measures to support growth and keep the system liquidity sufficient. We expect the policy rate to be at 5.50 per cent by the end of this fiscal year.”
The Indian stock markets ended trading on Wednesday in red. The rate cut from the RBI failed to lift the sentiment in the market, as tariff uncertainties loomed over global economies. The Sensex settled 380 points lower under 73,850, while the Nifty closed over 100 points down and a little above 22,400.
Harsh Dugar, Executive Director, Federal Bank, said, "The policy recognises the macroeconomic risks and the likely impact of trade wars, has clearly shown the intent to support growth(although the estimate has been revised downward) given the contained benign inflation environment. The reduction in the repo rate will lower borrowing costs, stimulate investment, and ultimately contribute to sustained economic growth. We expect the RBI to remain supportive on liquidity to support transmission in interest rates and support credit growth ."
RBI’s MPC announcement to reduce the policy repo rate by 25bps to 6 per cent and adoption of accommodating stance will provide a cushion to Indian economy from adverse effects of global economic uncertainty, while at the same time boost economic growth, said Hemant Jain, President, PHDCCI. "Government’s relaxation in income taxes announced during Budget 2025-26 along with reduction in interest rates will improve consumer sentiment which will accelerate GDP growth via uptick in private final consumption expenditure," he said.
Vijay Kuppa, CEO, InCred Money, highlighted that the RBI’s priority is shifting from inflation to growth. “If inflation remains in control and growth continues to be a concern, we may see further rate cuts by the RBI in future policies aimed at revving up the economy. For consumers, this means cheaper home and auto loans. Borrowers with floating rate loans should see EMIs fall in the coming months,” he said.
Sarvjit Singh Samra, MD and CEO, Capital Small Finance Bank, explained that the shift in RBI's monetary policy stance to 'accommodative' will provide support to the economy. "This policy move comes against the backdrop of a strengthening demand recovery and inflation staying firmly aligned with the 4 per cent target reinforced by a consistent easing in food inflation. For the banking sector this marks a significant tailwind, as lower funding costs and improved credit transmission are likely to boost lending activity. For Small Finance Banks, this presents a strong opportunity to scale up lending, backed by rising credit demand and a supportive interest rate environment," he noted.
Abhishek Raj, Founder & CEO of Jenika Ventures, said, "The RBI action in lowering the repo rate to 6.0 per cent is a determined move in the right direction. In a situation where there are international uncertainties that are impacting economic momentum, this rate cut will inject much-needed liquidity and relief to vital consumption-led industries such as real estate. Also, for the end consumers, particularly first-time homebuyers, this means reduced EMIs and enhanced affordability, which can lead to faster decision-making and demand for housing. We expect a big surge in interest, especially in Tier 2 and Tier 3 cities where demand is price-sensitive and increasing gradually."
Bajaj Broking Research said that with these strategic policy moves, the RBI aims to cushion the impact of global economic volatility while addressing domestic slowdown concerns. "The combination of rate cuts, a supportive policy stance, and forward-looking regulations is intended to bolster financial stability, catalyze credit flow, and pave the way for stronger and more resilient economic growth," it added.
Chandresh Vithalani, Director - Palladian Partners Advisory, noted, "In response to mounting global headwinds and trade disruptions, the RBI’s decision to lower the repo rate to 6 per cent and adopt an accommodative stance is both timely and strategic. For Mumbai’s real estate market—one of the country’s most dynamic yet price-sensitive regions—this rate cut is particularly relevant. Improved home loan affordability could nudge hesitant buyers, especially in the mid-income and aspirational luxury segments, to act."
Atul Monga, CEO and Co-Founder, BASIC Home Loan, highlighted that the rate cut reflects the strategic effort to stimulate economic growth amid global trade tensions. "I expect this move to have a positive impact on the housing market by making home loans affordable for existing borrowers and encouraging potential borrowers to invest in property. Additionally, lower borrowing costs could lead to increased demand in the real estate sector, which will benefit both developers and homebuyers. However, the actual benefit to consumers will depend on how quickly financial institutions pass on these rate cuts," he added.
Dr Gautam Kanodia, Founder of KREEVA and Kanodia Group noted that the RBI’s decision was largely on the expected lines. "Amid high market volatility and recent tariff hikes, this move will positively impact the country’s economy, further affecting the real estate market, too. Considering the market dynamics, this reduction would reduce home loan rates, urging more first-time buyers to invest in new property and encouraging developers to lead new projects and expand their developments in emerging areas," he said.
Gaurav Goel, SEBI Registered Investment Advisor, noted that the latest fiscal policy announced by the MPC had a 'dovish' tone. He added that the central bank is concerned about global economy after imposition of reciprocal tariffs by the Trump administration. However, he said, "The governor seem very optimistic on inflation as food prices have softened, crude prices have come down and net is predicting a good monsoon. We expect RBI to reduce repo rates thrice further taking repo rates to 5.25 per cent to spur growth in Indian economy."
Yashoraj Tyagi, CEO, CASHe lauded the central bank for focusing on expanding the framework for co-lending. "With the growing credit demand and now the reduced repo rate, to address the demand, the lending industry will have to come forward collectively (banks, NBFCs, fintech enablers) and pave way for more diverse partnerships between traditional lenders and agile, technology-driven platforms. This will enable better capital deployment, more efficient risk sharing, and ultimately, greater credit inclusion, especially for India’s aspirational new-to-credit segments. The co-lending model has already shown promise in combining the digital reach and innovation of fintechs with the financial muscle of larger institutions. A wider regulatory framework will now provide the clarity and confidence needed to scale such partnerships further," he added.
Reacting to the MPC's rate cut decision, Aman Trehan, ED, Trehan Iris, commented , “The reduction in interest rates is likely to ease financial constraints for developers, facilitating the timely completion of ongoing projects and encouraging the initiation of new developments. We are optimistic that this policy adjustment will act as a catalyst for growth within the real estate industry, promoting increased investment and contributing positively to the broader economy.”
Responding to who has the onus for managing the economy between the RBI and the government, the central bank's governor said, "It is a joint effort. The government has done its bit in the Budget through measures such as personal income tax rebates or capex increases. Now, we have reduced repo rates, changed stance going forward. We will jointly try to manage growth and inflation in our country."
Addressing the press conferene post MPC announcement, Governor Sanjay Malhotra said that tariffs are more likely to weigh on growth, rather than inflation. "Globally, most forecasts for GDP growth have come down. However, there has been a mixed response to inflation globally, the US expects it to go up. For india, we have reduced growth rate by 20 bps this year. On inflation, it can move actually both ways because of fall in demand due to tariff friction. It might help on the inflation front. All in all, we are concerned about tariff impact on growth more," he commented replying to the impact of tariffs on the domestic economy.
Umeshkumar Mehta, CIO, SAMCO Mutual Fund, said that the MPC's decision was in line with expectations. The executive added that this should help the financial system and economy. "Given the ongoing tariff war across the world, an accommodative stance along with a stable inflationary scenario would ensure buoyant credit growth and support our domestic environment. The rate cut is indeed positive for our bond markets but the ongoing pressure on the US bond yield restricts the full extent of the impact in India," he stated.
Ashish Agarwal, Director, AU Real Estate said this decision will reduce the financial burden on homebuyers by significantly lowering their EMIs. "This step is expected to reignite buyer interest, boost housing demand, and improve liquidity in the market. For developers, lower borrowing costs will facilitate smoother project execution and encourage new launches. Overall, this decision aligns with the goal of fostering growth in the residential real estate sector and bringing relief to aspiring homeowners," he added.
Ashish Sharma, AVP Operations, Brahma Group, noted that this is a welcome move for the real estate industry. "This proactive measure is poised to enhance housing affordability by lowering borrowing costs, thereby stimulating demand in the residential property market. The anticipated decrease in home loan interest rates is expected to bolster consumer confidence, encouraging prospective buyers to invest in their dream homes," he explained.
Reacting to the rate cut decision, BankBazaar CEO Adhil Shetty said that the move was expected. He suggested home loan consumers to take stock of their older loan benchmark and look into refinancing to a repo-linked home loan. "Home loan rates are about to go sub-eight again with today’s 25 bps rate cut. The lowest rates we’re currently seeing are between 8.10 and 8.35. However, the lowest rates are typically reserved for prime borrowers (credit score > 750) and refinance cases. Homeowners paying a substantially higher rate (50 bps or higher above prevalent rates) are advised to refinance their loans to avail lower rates. Do note that automatic, immediate and full rate cuts are available only on repo-linked home loans offered by banks. Despite six years of repo-linking, we see that only 50 per cent of floating rate loans with government banks are still linked to the MCLR and 2 per cent to Base Rate," he commented.
Sharing the measures decided by the MPC, Governor Malhotra said that the panel has decided to issue comprehensive norms on regulations related to gold loans. The official said that loans issued against gold jewellery and ornaments have variety of prudential and conduct-related regulations across regulated entities (REs). "With a view to harmonising such regulations across REs while keeping in view their risk-taking capabilities, and also to address a few concerns that have been observed, it has been decided to issue comprehensive regulations, on prudential norms and conduct related aspects, for such loans," the governor announced.
The Reserve Bank of India (RBI) governor, Sanjay Malhotra, said that India's services exports remained robust in January and February 2025, supported by strong performances in software, business, and transportation services. Looking ahead, net services exports and remittance inflows are expected to continue generating significant surpluses, helping to offset the trade deficit. As a result, the Current Account Deficit (CAD) for both 2024-25 and 2025-26 is projected to stay well within sustainable levels, he added.
The official said that outlook for food inflation remained positive. He noted that vegetable prices have come down sharply. "The uncertainties on rabi crops have abated considerably and the second advance estimates point to a record wheat production and higher production of key pulses over last year. Along with robust kharif arrivals, this is expected to set the stage for a durable softening in food inflation," he added.
Elaborating on growth ahead, the governor said, "Sustained demand from rural areas, an anticipated revival in urban consumption, expected recovery of fixed capital formation supported by increased government capital expenditure, higher capacity utilisation, and healthy balance sheets of corporates and banks are expected to support growth."
Governor Sanjay Malhotra revealed that the GDP estimate for the 2025-26 fiscal year (FY26) stands at 6.5 per cent. He added that the risks are evenly balanced.
| Period | GDP Growth Estimate |
| April-June 2025 | 6.5% |
| July-Sep 2025 | 6.7% |
| Oct-Dec 2025 | 6.6% |
| Jan-March 2026 | 6.3% |
According to the announcements made in the RBI MPC, these are the changes in benchmark rates.
| Category | Current | Earlier |
Repo Rate | 6% | 6.25% |
Marginal Standing Facility Rate | 6.25% | 6.50% |
Bank Rate | 6.25% | 6.50% |
Standing Deposit Facility Rate | 5.75% | 6% |
Policy Stance | Accommodative | Neutral |
Commenting on growth conditions, the RBI governor said, "Trade frictions dent global growth and this will impede domestic growth. Impact of relative tariffs vis-a-vis other countries is quite low. India is engaging proactively with US administration for FTA."
RBI Governor Sanjay Malhotra revealed that the Standing Deposit Facility (SDF) rate has been adjusted to 5.75 per cent, after slashing the repo rate by 25 basis points.
The governor said that the central bank is enabling NPCI to decide in consultation with banks and other stakeholders the UPI transaction limit for Person to Merchant transactions. "Today it is Rs 2 lakh. We will give freedom to MPCI to revise it as per discussion," the governor added.
He clarified that no change has been implemented in the Person-to-Person (P2P) transactions limit.
As of April 4, 2025, India's forex kitty stood at $676.3 billion, with an import cover of 11 months. The external sector remains resilient as key indicators stay robust, the governor said.
CPI Inflation for FY26 is estimated at 4 per cent. The inflation projections for first, second, third, and fourth quarter of FY26 stands at 3.6 per cent, 3.9 per cent, 3.8 per cent, and 4.4 per cent respectively.
Real GDP for FY26 estimated at 6.5 per cent, says Governor Malhotra. The growth projection has been reduced from 6.7 per cent estimated in February MPC due to global trade uncertainties.
Growth outlook for FY26
- Agriculture sector remains bright in FY26.
- Manufacturing showing signs of revival.
- Services sector activity continues to be resilient.
Our accommodative stance suggests the intended direction of policy rates going forward. Our stance provides policy rate guidance without any direct guidance on liquidity management, the governor said.
The RBI MPC, chaired by Governor Sanjay Malhotra, decided to change the monetary policy stance to ‘accommodative’ in the meeting.
The MPC voted unanimously to change the repo rate by 25 basis points and slashed it to 6 per cent in the first meeting of the panel in 2025-26 fiscal year (FY26).
RBI Governor Sanjay Malhotra has commenced his address. The official said that global economy is turbulent, equity markets are correcting and crude oil prices have fallen to their lowest in three years.
RBI Governor Sanjay Malhotra is set to reveal the decision of the Monetary Policy Committee (MPC) on benchmark interest rates and fiscal policy going ahead. This is the first MPC of the current fiscal year. You can watch his address live HERE.
Real estate developer Sanjeevini Group chairman and founder ,Umesh Gowda H A, said, "The impact of Trump tariffs on global growth will be felt as trade slows down in major economies affecting global growth. Amid this, as India’s inflation is on a decline, the RBI must cut rates by 50 bps in order to spur investment in order to enable businesses to invest in capex and fulfil the global demand. On the domestic front, a reduction in rates will drive up consumer demand across sectors and help push back against global uncertainties."
Udit Jain, Director, ONE Group Developers, pointed out, "Home loans play a pivotal role in home buying, particularly for end-users, as the majority rely on financing to purchase their dream homes. A reduction in interest rates directly impacts affordability, making homeownership more accessible and boosting demand across all segments of the housing market."
The executive explained that a consistent decline in interest rates is anticipated to work as a catalyst for the residential real estate sector in 2025-26 fiscal year (FY26). He noted that lower home loan rates will also lure in more buyers to enter the market. "Additionally, with increasing urbanisation and strong demand for quality housing in metro and Tier II cities, favorable lending conditions will further accelerate the growth of the housing sector in the coming year," he added.
Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd, expressed his hope of a 25 basis points cut in the key rates in MPC's meeting. He pointed out that this will help drive economic growth. However, he cautioned, "The actual impact of this rate cut will largely depend on how effectively and swiftly commercial banks transmit the RBI’s policy decision to borrowers. For the intended benefits to materialise, the transmission of the reduced rates must be both faster and smoother.
Sharing his expectation from the MPC, Ashok Kapur, Chairman, Krishna Group and Krisumi Corporation, noted that the anticipated rate cut from the panel would help infuse liquidity into the market and enhance borrowing and spending. "The Apex Bank is expected to further support the economy and borrowers by reducing the policy rate by 25 basis points, bringing the repo rate closer to 6 per cent. The housing sector, in particular, stands to benefit significantly, as lower interest rates would further reduce home loan EMIs, making homeownership more affordable for a larger section of buyers. The expected policy rate cut is likely to sustain the strong sales momentum in the housing sector in the upcoming quarter," the industry executive added.
GIFT Nifty touched 22462 before 8 AM, clocking a fall of over 50 points. This indicated the tension prevalent among investors as they keenly look out for the RBI MPC's final decision on benchmark interest rates and the fiscal policy going ahead.