RBI MPC Meeting: Repo Rate Unchanged At 6.5%, Cuts CRR By 50 bps

The Reserve Bank of India ( RBI ) has opted to keep the benchmark repo rate unchanged at 6.5 per cent for the eleventh consecutive meeting. The RBI's Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, maintained its "Neutral" stance, highlighting its focus on achieving price stability while supporting economic growth.
Governor Das emphasised that while growth remains a priority, price stability is paramount for the well-being of the public. He noted that the "last mile of disinflation" is proving to be a prolonged and challenging process for economies worldwide.

In addition to the rate decision, the RBI also announced a significant move to boost liquidity in the economy by reducing the Cash Reserve Ratio (CRR) by 50 basis points, bringing it down to 4 per cent. This change is expected to infuse Rs 1.16 lakh crore into the financial system, providing further support to the economy amidst global headwinds.

“Prudence and practicality demand that we remain careful and sensitive to dynamically evolving situations. Thus the status quo of MPC has remained appropriate and essential,” RBI governor Shaktikanta Das said. 

GDP and Inflation Forecasts for FY25 and FY26

The RBI has revised its GDP growth forecast for FY25 to 6.6 per cent, with expectations of a steady growth trajectory throughout the year. The projections for the upcoming quarters are as follows:
Q3FY25: 6.8 per cent
Q4FY25: 7.2 per cent
Q1FY26: 6.9 per cent
Q2FY26: 7.3 per cent

On inflation, the RBI forecasted an overall rate of 4.8% for FY25, with a moderation expected in the latter half of the year:

Q3FY25: 5.7 per cent
Q4FY25: 4.5 per cent
Q1FY26: 4.6 per cent
Q2FY26: 4 per cent

Governor Das reiterated the importance of achieving a balance between growth and inflation, acknowledging the challenges of navigating the final stages of disinflation. As the RBI continues to steer India’s monetary policy, its decisions reflect an ongoing effort to maintain economic stability while fostering conditions conducive to sustainable growth.