Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has decided to cut the repo rate for the first time in two years, reducing it by 25 basis points to 6.25 per cent from 6.5 per cent, Governor Sanjay Malhotra announced on Friday. During the meeting, which took place between February 5 and 7, MPC members unanimously voted to cut the repo rate.
Following are the highlights of the bi-monthly monetary policy announced by the Reserve Bank of India Governor Sanjay Malhotra
Flexible inflation targeting framework served India well.
The global economic backdrop remains challenging. High frequency indicators suggest resilience.
Indian economy, though strong and resilient, did not remain immune to the global uncertainties
The average inflation has lowered post the production of inflation targeting framework, CPI has mostly remained aligned.
Flexible inflation targeting framework served India well.
The global economic backdrop remains challenging. High frequency indicators suggest resilience.
Indian economy, though strong and resilient, did not remain immune to the global uncertainties
Inflation has declined supported by favourable outlook GDP growth for FY26 at 6.7%.
CPI inflation for FY25 projected at 4.8%
Look at changed Key Policy Rates
| CRR | 4.5% |
| SLR | 18% |
| Repo rate | 6.25 |
| MSF | 6.5% |
| SDF | 6% |
| Reverse repo rate | 3.35% |
| Bank Rate | 6.5% |
| MSF Rate (Marginal Standing Facility Rate) | 6.75% |
*SDF is the new floor for policy rates introduced by RBI in April 2022, as a mechanism to curb inflation by absorbing liquidity. The SDF rate is applied for which banks park their excess funds with the RBI without any collateral. Although, earlier system of reverse repo rate will remain as part of RBI’s toolkit and its operation will be at the discretion of the RBI for purposes specified from time to time, according to RBI’s announcement. This move of RBI makes the reverse repo rate redundant for now.
