Monetary Policy Key Highlights: 25 Basis-Point Repo Rate Cut, 'Accommodative' Stance, FY26 GDP Forecast
The RBI has revised its growth projection for real GDP in FY26 to 6.5%, marking it down by 20 basis points.
In its latest monetary policy review, the Reserve Bank of India made several significant announcements. Here are the five key highlights:
Repo Rate Cut by 25 Basis Points: The RBI's Monetary Policy Committee (MPC) decided to cut the repo rate by 25 basis points, bringing it down to 6%. The MPC noted that inflation is currently below target, providing room for this rate cut.
Stance Changed to Accommodative: The MPC has shifted its stance from "neutral" to "accommodative". An accommodative stance typically involves an easy monetary policy aimed at stimulating the economy. In contrast, a neutral stance is associated with an economic state that neither requires stimulation of growth nor curbing of inflation.
Growth Projection Cut for GDP: The RBI has revised its growth projection for real GDP in FY26 to 6.5%, marking it down by 20 basis points. The quarterly projections are as follows: Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%.
Inflation Has Cooled Down: Headline inflation moderated during January and February. The outlook for food inflation has turned decisively positive, indicating a favourable trend in price stability.
Exports Will Be Weighed Down By Tariffs: The RBI Governor highlighted that global growth is being dented by trade frictions, which will impede domestic growth. Higher tariffs may impact net exports. However, India is proactively engaging with the US administration on trade issues. Despite global trade and policy uncertainties, the governor expressed confidence in managing domestic growth.
