The Reserve Bank of India (RBI) Governor Sanjay Malhotra presented the first monetary policy for the financial year 2025-26 announcing an unanimously rate cut by 25 bps to 6%.
The Governor also announced that the MPC has decided to change the stance to ‘accomodative’ from ‘neutral’.
He said the standing deposit facility, the SDF rate, under the liquidity adjustment facility, shall stand adjusted to 5.75%, and the marginal standing facility, rate of the MSF rate and the bank rate shall stand adjusted to 6.25%:
The April policy meeting took place against the backdrop of rising global trade tensions following recent tariff hikes by the US, fueling concerns of a potential global recession.
Speaking on the recent trade tariffs imposed by the US President Donald Trump, RBI Governor said the trade tariff has posed ‘new headwinds’ for global growth and inflation. “Overall, the year has begun on an anxious note for the global economy,” he said.
“Slow down in global growth could entail further softening in commodity and crude oil prices,” he said.
Governor Malhotra further said the dent on global growth due to trade frictions will also impede domestic growth. “Higher tariff shall have negative impact on net exports,” he said.
Notably, at its February 2025 policy meet, RBI reduced the repo rate by 25 basis points maintaining a “neutral” monetary stance. This was the first rate cut in almost five years.
The Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, held deliberations from April 7 to 9
Markets and economists alike had broadly expecting a repo rate cut of at least 25 basis points.
Projects GDP at 6.5%
The RBI Governor has projected the GDP growth at 6.5%.
Giving the quarterly projections for the upcoming fiscal, Governor Malhotra said the GDP for Q1 is projected at 6.5%; Q2 at 6.7%; Q3 at 6.6%; and Q4 is 6.3%.
The National Statistics Office (NSO) has estimated real GDP growth at 6.5% for 2024-25, on top of 9.2% in 2023-24.
Projects inflation at 4%
Governor said that the inflation moderated in January, and for the Financial Year 2026, he projected the inflation at 4%.
Further giving the quarterly projections, he said the inflation for Q1 is projected at 3.6%; Q2 at 3.9%; Q3 at 3.8%; and Q4 at 4.4%.
