Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday announced that the central bank has slashed the policy repo rate by 25 basis points from 6.5 per cent to 6.25 per cent. The decision was taken on a unanimous basis. The MPC committee decided to maintain a neutral stance. The SDF rate shall be at 6 per cent and the bank rate shall be pegged at 6.5 per cent, he added. The governor said in his address that flexible inflation targeting framework has served India well, while adding the interest of the economy demands financial stability. The Reserve Bank of India (RBI) Friday forecasted inflation to ease to 4.2 per cent in the upcoming financial year, buoyed by favourable conditions such as good crop production and ease in vegetable prices.
For the current financial year ending March, the central bank has projected CPI inflation at 4.8 per cent assuming a normal monsoon. The Sanjay Malhotra-led MPC has projected inflation at 4.5 per cent in the first quarter of the financial year 2025-26, 4 per cent in the second quarter; 3.8 per cent in Q3; and 4.2 per cent in Q4. RBI projected real GDP growth at 6.7% for FY26, For Q1 FY26, the GDP growth forecast was lowered to 6.7% from 6.9%, while the Q2 projection was reduced to 7% from 7.3%. The RBI retained its growth estimate for Q3 and Q4 FY26 at 6.5%. Watch top Economists DK Joshi, Chief Economist, CRISIL; Sunil Sinha, Economist and Garima Kapoor, Executive Vice President - Economist , Elara Capital in conversation with Siddharth Zarabi, Editor, Business Today as they discuss the RBI MPC decisions and their impact.