Repo rate cut by 25 bps to 6.25% by the RBI after nearly five years.
Almost after five years, the policy repo rate has been reduced by 25 basis points, from 6.50% to 6.25%, by the Reserve Bank of India (RBI).
The announcement was made by Governor Sanjay Malhotra on 7 February in Mumbai, following a three-day meeting of the MPC.
As a result, the Standing Deposit Facility (SDF) rate will be fixed at 6.00%, while the Marginal Standing Facility (MSF) rate and the Bank Rate will both remain at 6.50%.
A ‘neutral’ stance has also been unanimously decided to be maintained by the MPC, with a clear focus on aligning inflation with the target while supporting growth.
In May 2020, the last rate cut was by 25 basis points to 6.25%.
The most recent revision was in February 2023, when the policy rate was raised by 25 basis points to 6.50%.
Mr Malhotra said inflation has moderated and is expected to decline further in 2025-26, gradually coming in line with the target.
Real GDP estimates have been revised from 6.9% to 6.7% for the next financial year by the bank.
CPI inflation for the current financial year has been projected at 4.8%, with Q4 at 4.4%, by the RBI.
Assuming a normal monsoon, CPI inflation for the financial year 2025–26 has been projected at 4.2%.
