Fri Jun 6, (Source: www.fibre2fashion.com)
The Reserve Bank of India's Monetary Policy Committee (MPC) has reduced the policy repo rate by 50 basis points to 5.50 per cent, effective immediately. The standing deposit facility (SDF) now stands at 5.25 per cent, and the marginal standing facility (MSF) and Bank Rate at 5.75 per cent.
Insights
RBI's Monetary Policy Committee cut the repo rate by 50 bps to 5.50 per cent, citing easing inflation and the need to boost growth.
CPI inflation fell to 3.2 per cent in April, with FY26 inflation forecast lowered to 3.7 per cent.
Real GDP growth is projected at 6.5 per cent.
The policy stance shifted to 'neutral', with future moves to be data dependent.
Next review is in August.
This marks the second consecutive rate cut in 2025, following a cumulative 100 bps reduction since February. The decision, taken at the MPC’s 55th meeting chaired by Governor Sanjay Malhotra, was driven by broad-based easing in inflation and the need to support domestic consumption and investment. Five out of six MPC members voted in favour of the 50 bps cut, with one member favouring a smaller 25 bps cut, the MPC said in a statement.
India’s headline CPI inflation eased to a six-year low of 3.2 per cent in April 2025, prompting the RBI to revise its FY26 inflation forecast to 3.7 per cent, down from 4 per cent earlier. The inflation outlook remains benign, supported by falling commodity prices and expectations of a favourable monsoon.
India’s real GDP growth for 2025–26 is projected at 6.5 per cent, underpinned by strong private consumption, rising capital formation, and improving rural demand. However, the RBI flagged global uncertainties and geopolitical tensions as potential downside risks.
Given the changing macroeconomic landscape, the MPC has also shifted its stance from ‘accommodative’ to ‘neutral’ and signalled a cautious data-dependent approach ahead.
The next policy meeting is scheduled for August 4-6, 2025. (Source: www.fibre2fashion.com)