Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that the Monetary Policy Committee (MPC) has unanimously decided to reduce the policy rate by 25 basis points (bps), from 6.25 per cent to 6 per cent. Earlier in February, the Reserve Bank of India’s six-member monetary policy committee (MPC) announced its first rate cut since May 2020 amid a slowdown in the economy. More details will be released soon. Please visit this link again.
The MPC has also decided to slash the GDP growth to 6.5 per cent in 2025-26 from 6.7 per cent projected earlier. Retail inflation is expected to be 4 per cent in 2025-26, MPC said.The six-member MPC took the decision amid heightened uncertainty in the global market following the recent announcement of reciprocals tariffs by US President Donald Trump.
The rate cut has come in the wake of fears that higher tariff rates may lead to inflation, increase in trade tensions and a lower growth in the world economy. “Global economic outlook is fast changing. FY26 has started on an anxious note and some global trade frictions are coming true,” RBI Governor Sanjay Malhotra said.
The Monetary Policy Committee (MPC) of the Reserve Bank of India held its 54th meeting from April 7 to 9, 2025, under the leadership of Governor Shri Sanjay Malhotra. The meeting was attended by other members including Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Rajiv Ranjan, and Shri M. Rajeshwar Rao.
After reviewing the current economic conditions, the MPC decided to reduce the policy repo rate by 25 basis points, bringing it down from 6.25% to 6.00%. This rate cut is effective immediately. Along with this, the Standing Deposit Facility (SDF) rate has been adjusted to 5.75%, and both the Marginal Standing Facility (MSF) rate and the Bank Rate have been set at 6.25%. This decision is aimed at keeping inflation close to the target of 4% (within a range of ±2%) while also supporting economic growth.
Globally, the economic outlook remains uncertain. Recent trade restrictions have added more confusion to the global economic scene. Financial markets have reacted with falling equity prices, a decline in the US dollar index, and lower crude oil and bond yields. Despite this, India’s economy is showing signs of strength. According to the National Statistics Office (NSO), India’s real GDP grew by 9.2% in 2023–24 and is expected to grow by 6.5% in 2024–25. The growth is likely to be supported by strong rural demand, a possible rise in urban consumption, increased government capital spending, and healthy financial conditions of companies and banks. While industrial and services sectors are recovering well, exports may be impacted due to global uncertainties. Taking all factors into account, GDP growth for 2025–26 is also projected at 6.5%, with each quarter expected to grow steadily.
Inflation has shown a clear downward trend. CPI inflation fell from 5.2% in December 2024 to 3.6% in February 2025, helped by a sharp drop in vegetable prices. Food inflation reached a 21-month low, and fuel prices remained in deflation. Although gold prices pushed core inflation slightly higher in February, overall inflation is now closer to the target. The outlook for food inflation is positive, as the rabi crop situation has improved and wheat and pulse production is expected to be higher than last year. With a good kharif season and falling oil prices, inflation is likely to stay under control. CPI inflation for 2025–26 is projected at 4.0%, with quarterly estimates ranging from 3.6% to 4.4%.
The MPC noted that inflation is now below the target level and is expected to remain stable. At the same time, economic growth is slowly recovering from a weak performance in the first half of 2024–25. With global conditions still uncertain, the MPC felt it was necessary to support growth while keeping inflation in check. Therefore, the committee not only reduced the repo rate but also changed its policy stance to “accommodative,” meaning it is open to supporting growth further if needed. However, it also emphasized the importance of closely monitoring the economic situation as conditions continue to evolve.
The detailed minutes of this MPC meeting will be released on April 23, 2025. The next meeting of the MPC is scheduled for June 4 to 6, 2025.
