The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) lowered the repo rate by 25 basis points to 6.25% on Friday. The MPC has also unanimously agreed to maintain a neutral approach and would concentrate on inflation while promoting growth, according to RBI Governor Sanjay Malhotra. He went on to say that this would give them flexibility in responding to the macroeconomic climate.
According to him, inflation has decreased and is anticipated to moderate and progressively approach the RBI’s target. According to Malhotra, the RBI is dedicated to supplying the economy with adequate liquidity and will take action to guarantee long-term liquidity to satisfy system requirements.
Additionally, he stated that the RBI was closely monitoring the rupee and doing everything in its power to maintain the stability of the Indian currency. According to him, rural demand has already recovered, and the Indian economy is predicted to grow. Malhotra added that the MPC believed it was necessary to maintain vigilance due to the high volatility of international financial markets and trade policies.
The RBI’s monetary policy pronouncement almost immediately follows the Budget 2025–2026. The government’s demand for market borrowing has decreased as a result of the finance minister’s decision to stick to the fiscal consolidation path and lower the fiscal deficit target from 4.8% of GDP to 4.4% of GDP for 2025–2026.
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