RBI Monetary Policy Key Highlights: Repo Rate Cut, Rupee Measures, Inflation Outlook And More
RBI's action comes against the backdrop of global trade volatility and rupee weakening, with the domestic currency recently breaching 90 levels against the US dollar.
The Reserve Bank of India Monetary Policy Committee has cut the repo rate by 25 basis points to 5.25%, delivering on expectations.
The decision was made unanimously by the MPC committee, which has also unanimously decided to maintain a 'neutral' stance.
RBI's action comes against the backdrop of global trade volatility and rupee weakening, with the domestic currency recently breaching 90 levels against the US dollar.
In his MPC address, the RBI Governor stated that
RBI MPC Meeting: Five Key Highlights
Repo Rate Cut & Stance Unchanged
The RBI MPC has voted unanimously to reduce the repo rate by 25 basis points to 5.25%. This breaks a trend of two consecutive time in which the RBI decided to keep rates unchanged.
RBI has also maintained 'neutral' stance, with most of the commentary from the governor Sanjay Malhotra alluding to global uncertainty.
GDP Growth Projection
The RBI has raised its real GDP growth projection for the current fiscal to 7.3%, citing stronger-than-expected momentum in the economy.
This is a considerable improvement from the previous 6.8% guidance in the previous MPC meet.
Outlook On Inflation
The RBI also reduced CPI inflation forecast for FY26 at 2.0%, lower than the earlier projection of 2.6%, reflecting a sharper-than-expected cooling in prices.
Inflation is estimated at 0.6% in Q3 and 2.9% in Q4, before picking up to 3.9% in the first quarter of FY27 and edging higher to 4.0% in Q2 of FY27.
Currency Liquidity Measures
In the last MPC meet, RBI governor Sanjay Malhotra had said that the RBI was keeping a close eye on the rupee.
With the rupee recently touching the 90 mark against the US Dollar, RBI has introdued a couple of measures to stabilise the local currency.
The Indian central bank has announced a $5 billion three-year dollar-rupee buy/sell swap, alongside plans to purchase Rs 1 lakh crore worth of government bonds through open market operations.
Measures To Improve Banking Ecosystem
The RBI will launch a two-month nationwide campaign starting January 1 to address customer grievances and strengthen its consumer redressal framework.
