Monetary Policy Committee - 09th April 2025

09th April 2025 -RBI’s MPC


 The RBI’s MPC(Monetary Policy Committee) opted to reduce the repo rate by 25 bps for the second consecutive time to 6.0% and changed the stance from neutral to accommodative with a 6:0 majority. Sustainable economic growth along with stable prices occupied top priority for the central bank amid uncertainty resulting from recent tariff-related measures.

 ➢ Key highlights of RBI policy outcome:-

Repo rate reduced by 25 bps to 6.0% The MPC (voted 6:0) has reduced the repo rate to 6.0% from 6.25%. Marginal Standing Facility (MSF) and SDF (Standing Deposit Facility) are also changed to 6.25% and 5.75% respectively. FY26 Real GDP growth forecast revised to 6.5%

The RBI has lowered the real GDP growth forecast for FY26 to 6.5% from the previous 6.7%. Real GDP growth in 1QFY26/2QFY26/3QFY26/4QFY26 is projected at 6.5%/6.7%/6.6%/6.3% respectively.

Agricultural yields are expected to remain strong with expectations of healthy rainfall and reservoir levels.

Industrial activity continues to recover, and service sector is expected to be resilient. On the demand front, rural demand continues to be healthy with an anticipated revival in urban consumption.

Headwinds from global tariff measures however may pose a challenge to economic growth going ahead.

Inflation forecast for FY26 revised to 4.0% CPI forecast for FY26 is projected at 4.0% from previous forecast of 4.2%, with 1QFY26/2QFY26/3QFY26/4QFY26 inflation projected at 3.6%/3.9%/3.8%/4.4% respectively.

Food prices continue to decline due to a strong harvest along with robust kharif arrivals which is expected to set the stage for a durable softening in food inflation. Fall in crude oil prices augurs well for the inflation outlook.

Core inflation is expected to remain moderate. Rising uncertainty in the global economic landscape and weather related supply disruption however poses upside risks to the inflation trajectory.

Liquidity and Financial Market Conditions The system liquidity remained in deficit during Jan’25 due to capital outflows and forex operations.

RBI has injected system liquidity through various measures such as OMOs, buy-sell swaps, cut in CRR, etc. As a result, the system liquidity deficit improved during Feb’25 to Mar‘25 and turned into a surplus at the end of Mar’25.

With pick-up in government spending in latter half of March, system liquidity has further improved and now stands at a surplus of Rs 1.5 lakh crore as on 7th April, 2025.

The central bank continues to monitor the evolving liquidity and financial market conditions while proactively taking appropriate measures to ensure orderly liquidity conditions.


 Additional measures 

• RBI will issue comprehensive regulations on prudential norms and conduct-related aspects for gold loans. The central bank will also issue draft guidelines pertaining to non-fund based facilities with a view to consolidate guidelines for all regulated entities.

 • RBI will issue a draft framework for the securitization of stressed assets through a market-based mechanism, in addition to the existing ARC route under the SARFAESI Act, 2002. 

• Co-lending arrangements to be expanded to all regulated entities and to all loans – priority sector or otherwise. 

• NPCI, in consultation with stakeholders, will review the transaction limit for Person to Person payments (P2P) and Person to Merchant payments (P2M) transactions. Outlook

 • The Reserve Bank of India's policy actions are in-line with market expectations. MPC decision to reduce Repo rate and further boost the liquidity is closely aligned to downward revision in the real GDP growth outlook. The upcoming guidelines for gold loan, on the backdrop of several irregularities flagged by the RBI earlier, will be key to watch. Overall policy meeting outcome is well balanced and positive for the financial markets. 

The next meeting of the MPC is scheduled between June 4-6, 2025.

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