RBI MPC Review April 2025 HIGHLIGHTS: 25-bp repo rate cut, stance changed to 'accommodative', FY26 inflation projection eased to 4%

The Reserve Bank of India (RBI) announced a 25-basis-point reduction in the repo rate to 6.0% on April 9, 2025, marking the second policy review under Governor Sanjay Malhotra. The Monetary Policy Committee (MPC) unanimously decided to shift its stance from 'neutral' to 'accommodative,' effective immediately, as part of efforts to support economic growth amid rising global uncertainties. The RBI lowered its inflation projection for FY26 to 4.0%, down from the earlier estimate of 4.2%, while revising GDP growth forecasts to 6.5% for the fiscal year. Quarterly GDP projections for FY26 were set at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4, though the RBI noted high risks due to escalating trade tensions and policy volatility. Governor Malhotra emphasized that tariff-related measures and global trade disputes were primary concerns, warning they could delay rate cuts and hinder growth. The central bank also highlighted global financial shifts, including a weaker US dollar, softened bond yields, and falling crude oil prices, as contributing to economic uncertainty. The RBI remains committed to ensuring liquidity transmission to facilitate the impact of rate cuts on the broader economy. Malhotra stressed that while inflation remains a priority, the focus is now on mitigating tariff-induced risks to growth, particularly amid signs of policy divergence among central banks worldwide. The decision reflects cautious optimism, as India’s economic recovery shows progress but remains below desired levels. The RBI’s accommodative stance aims to balance price stability with sustained growth amid evolving domestic and international challenges.