Monetary Policy Review: RBI Cuts Repo Rate By 25 bps, Maintains Stance At ‘Neutral’ — CareEdge Analysis

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CareEdge Report

In its February 2025 meeting, the Monetary Policy Committee of the Reserve Bank of India reduced the policy repo rate by 25 bps to 6.25% and retained neutral stance unanimously. This decision to lower the policy rate comes amidst moderating growth momentum, increasing challenges from external factors, and a slowdown in inflationary pressures.

The decision to retain the neutral stance will enable the RBI to adjust its policy according to the evolving macroeconomic conditions amid heightened uncertainty, especially from the external sector.

In line with our expectations, the GDP growth for the upcoming year (FY26) is projected at 6.7%. However, the RBI anticipates a lower inflation rate of 4.2% for FY26, below our projections of 4.5%.

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