RBI Monetary Policy Committee (MPC) Report – April 9, 2025

Key Highlights 1. Repo Rate Cut o The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points, bringing it down from 6.25% to 6.00%. o This is the second consecutive cut in 2025, following a similar reduction in February. 2. Policy Stance o The RBI changed its monetary policy stance from "neutral" to "accommodative", signaling its intent to support economic growth amid global uncertainties. 3. Revised Economic Projections o GDP Growth Forecast (FY2025-26): Lowered from 6.7% to 6.5% o Inflation Forecast: Reduced from 4.2% to 4.0% 4. Context and Rationale o The decision was influenced by rising concerns around U.S. tariffs on Indian exports, which could negatively affect external demand. o RBI Governor Sanjay Malhotra stated that while growth is on an upward trajectory, it remains below desirable levels, necessitating policy support. 5. Inflation Projection for FY2025-26 Lowered to 4.0% o The RBI revised its inflation projection down from 4.2% to 4.0%, citing robust agricultural output and declining global crude oil prices. o CPI-based retail inflation dropped by 1.6 percentage points between January and February 2025—from 5.2% in December 2024 to 3.6% in February 2025—reflecting a strong disinflationary trend in key components like food and fuel. Impact Analysis of the Policy Changes 1. Borrowing & Lending Rates • Banks are expected to reduce lending rates, leading to cheaper home, auto, and business loans. • This may help boost credit growth and encourage borrowing in sectors like housing, infrastructure, and MSMEs. 2. Stimulus to Economic Activity • An accommodative stance supports future rate cuts, offering a cushion if the economic environment deteriorates further. • Lower interest rates can stimulate private sector investment and consumer spending. READ MORE IN THE NEXT PART