Monetary Policy Live: Governor Sanjay Malhotra announced the decisions taken at the three-day meeting of the Monetary Policy Committee (MPC) on Friday morning. He cut the repo rate by 0.25%.
Monetary Policy Live: RBI Governor Sanjay Malhotra on Friday morning announced the decisions taken in the three-day meeting of the Monetary Policy Committee (MPC). He has reduced the repo rate by 0.25 percent. This means that you will not have to wait any longer for cheap loans. Presenting the bi-monthly monetary policy review, RBI Governor Sanjay Malhotra said that the Monetary Policy Committee of the Reserve Bank of India has unanimously decided to reduce the key policy rate repo by 0.25 percent to 5.25 percent. At the same time, RBI has increased the GDP growth forecast for the current financial year 2025-26 to 7.3 percent.
The MPC’s bi-monthly monetary policy meeting began on Wednesday. This comes at a time when economic growth is strong, inflation is at historically low levels, and the Indian rupee remains near its record low of around 90 rupees per US dollar.
125 bps repo rate cut this year
This year, the RBI reduced the repo rate by a total of 125 bps in four meetings, starting in February. In its October policy, the MPC kept the repo rate unchanged at 5.50% and maintained the policy stance as neutral. The RBI raised the GDP growth forecast for FY2026 to 6.8% from the earlier 6.5%, and also lowered the CPI inflation forecast for FY2026 to 2.6% from the earlier 3.1%.
What is the RBI’s inflation forecast?
The RBI reduced its CPI inflation forecast for FY2026 to 2% from the previous 2.6%. The quarterly projections are as follows:
Third Quarter FY2026: Reduced from 1.8% to 0.6%
Fourth quarter fiscal year 2026: Reduced from 4% to 2.9%
First quarter fiscal year 2027: Reduced from 4.5% to 3.9%
Second quarter fiscal year 2027: Forecast 4%
GDP Growth Estimates
The RBI raised its GDP growth forecast for FY2026 to 7.3% from the previous 6.8%. The quarterly estimates are as follows:
Third Quarter FY2026: 7%, up from 6.4%
Fourth Quarter FY2026: 6.5%, up from 6.2%
First Quarter FY2027: 6.7%, up from 6.4%
Second Quarter FY2027: 6.8%
What Economists Expected
The Reserve Bank of India (RBI) will announce the decisions taken in its bi-monthly monetary policy review on Friday. Experts expect a 0.25 percent cut in the repo rate. However, some experts believe the repo rate may be kept unchanged for the third time.
Governor Sanjay Malhotra will announce the decisions taken in the three-day meeting of the Monetary Policy Committee (MPC) on Friday morning. The MPC meeting for the next bi-monthly monetary policy began on Wednesday. This meeting is taking place against the backdrop of declining inflation, rapid gross domestic product (GDP) growth, the rupee crossing 90 against the dollar, and ongoing geopolitical tensions.
Amid declining retail inflation, the RBI has cut the repo rate by a total of 1 percent in three installments since February. However, the repo rate has been kept stable at 5.5 percent for the last two installments.
Many experts say that while growth remains strong, a significant decline in retail inflation has created additional room for a cut in the key short-term lending rate. The RBI governor also said last month that there is room for further policy rate cuts.
No Change Likely
However, some experts believe the RBI may maintain the status quo on interest rates as economic growth has accelerated, driven by various reforms such as fiscal consolidation, targeted public investment, and a reduction in the Goods and Services Tax (GST) rate.
Core inflation based on the Consumer Price Index remains below the government-set target of 2 percent. Furthermore, the Indian economy recorded a better-than-expected GDP growth rate of 8.2 percent in the second quarter.
RBI Responsibility
The government has directed the RBI to ensure that retail inflation remains at 4 percent, with a margin of 2 percent. The RBI is also expected to revise its GDP growth forecast higher given the better-than-expected first-half figures. The Reserve Bank of India had raised its GDP forecast for the current fiscal year 2025-26 from 6.5 percent to 6.8 percent in October.
