With an aim to give a boost to a slowing economy, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has decided to cut repo rate by 25 bps to 6.25%, after keeping it unchanged at 6.50% for two years. This is the first rate cut initiated by the RBI in five years, the last one being in May 2020.
The MPC committee decided to maintain a neutral stance. The SDF rate shall be at 6 per cent and the MSF and bank rate pegged at 6.50 per cent.
The Central Bank has retained FY25 inflation forecast at 4.8% and projected inflation at 4.2% for FY26. It raised India’s FY26 growth aim to 6.7% from 6.6%. It noted that the CAD for this year is expected to remain well within the sustainable level.
