RBI MPC: Central Bank Slashes Repo Rate By 25 Bps To 6%
This is the central bank’s first monetary policy decision of the new financial year. The three-day Monetary Policy Committee (MPC) meeting began on Monday
The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) has decided to cut the repo rate by 25 basis points from 6.25 per cent to 6 per cent, RBI Governor, Sanjay Malhotra, announced on Wednesday. The committee has also changed its stance from 'neutral' to 'accommodating'. This is the central bank’s first monetary policy decision of the new financial year. The three-day Monetary Policy Committee (MPC) meeting began on Monday.
The governor said that after a thorough evaluation of the evolving macroeconomic and financial conditions, as well as output trends, the MPC voted unanimously to lower the policy repo rate by 25 basis points, effective immediately.
He added that as a result, the Standing Deposit Facility (SDF) rate, under the liquidity adjustment facility, will be adjusted to 5.75 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate will both be set at 6.25 per cent, Malhotra added. He also noted that growth continues to remain on a recovery trajectory.
"Our stance provides policy rate guidance without any direct guidance on liquidity management," said the Governor.
Also Read: RBI MPC Meeting LIVE Updates: Repo Rate Slashed By 25 Bps, Inflation Estimate For FY26 At 4 Per Cent
Second Consecutive Rate Cut Under Governor Malhotra
This marks the second consecutive rate cut under Governor Malhotra, who assumed office earlier this year. In the last monetary policy meeting the repo rates were slashed by 25 per cent from 6.5 per cent to 6.25 per cent. The decision comes amid a challenging period for the Indian economy, which is grappling with both external and domestic pressures, including the imposition of a 26 per cent tariff on Indian exports by the United States.
India’s economy is estimated to have grown by 6.5 per cent in the previous fiscal year, its slowest pace since the pandemic. The US tariffs are expected to reduce India’s projected growth by 20 to 40 basis points, according to analysts. As a result, several institutions, including Goldman Sachs, have lowered their 2025 GDP forecast for India from 6.3 per cent to 6.1 per cent, well below the RBI’s projection of 6.7 per cent.
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