RBI Monetary Policy Updates: CRR, Repo Rate See Sharp Cuts; Gold Loan Rules Likely To Ease
The RBI has changed its stance from 'Accommodative' to 'Neutral'. The CPI Inflation has also been revised downward to 3.7% for financial year 2026.
KEY HIGHLIGHTS
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RBI Repo Rate Cut Live: Key Highlights
Top five key takeaways:
Jumbo rate cut of 50 basis points; repo rate at 5.5% now.
Changes stance to 'Neutral' from 'Accommodative'.
FY26 CPI Inflation projection down at 3.7% vs 4% earlier.
CRR cut by 100 bps, at 3% now versus 4% earlier.
FY26 GDP growth projection unchanged at 6.5%.
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RBI Monetary Policy Live Updates: Rupee Closes Stronger
The Indian rupee closed 16 paise stronger at 85.64 against the US dollar on Friday in comparison to its previous close of 85.80 on Thursday. This significant appreciation comes amid various global and domestic economic factors influencing the currency markets.
The domestic currency opened 6 paise weaker at 85.86 against the US dollar on Friday. However, the Rupee was trading stronger "after RBI’s MPC cut rates by 50-bps, more than expectations" said Sriram Iyer, Senior Research Analyst at Reliance Securities.
RBI Monetary Policy Live Updates: Rate Cut Ripple Effect Will Boost Agricultural Activities
"Overall, this move will augur well for the food services sector in terms of a reduced input cost, as a ripple effect of lowered rates that will boost agricultural activities and income of rural households," Sanjay Kumar, CEO & MD, Rassense Pvt.
RBI Monetary Policy Live Updates: Change In Stance Aimed At Tempering Any Potential “Irrational Exuberance” In Market
The policy stance has been shifted from ‘accommodative’ to ‘neutral’. "Although this change might be read as a signal that the rate cut cycle is nearing its end, we believe it is aimed at tempering any potential “irrational exuberance” in the financial markets," said Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group.
RBI Monetary Policy Live Updates: Axis Bank To See Rate Cut Because of Rate Cut
RBI's rate cut will trigger a flurry of rate cuts on savings accounts, said Axis Bank's Rajiv Anand. He also added that the bank would see margin pressure because of the rate cut.
RBI Monetary Policy Live Updates: CRR Cut To Boost Banks' Margins, Accelerate Rate Transmission, Says Governor
The reduction in cash reserve ratio by 100 basis points in a staggered manner will ease the cost of funding for banks and will also help improve their net interest margins by 7 bps, Reserve Bank of India's Governor Sanjay Malhotra said during post policy conference on Friday.
The CRR, which has traditionally hovered around 4%, was temporarily reduced by 1% during the Covid-19 pandemic to provide liquidity relief.
Governor Malhotra noted that maintaining a 4% CRR may no longer be necessary, and a 3% ratio will be sufficient for liquidity management. This reduction will free up more funds for banks to deploy in lending activities, thereby lowering their cost of funds and enhancing profitability.
He said that the reduction in CRR is designed not only to provide liquidity but also to accelerate the transmission of monetary policy rate cuts to the real economy. Historically, transmission of policy rate changes to lending and deposit rates has taken 6-9 months. However, this time around, the RBI has observed a much faster pace.
