RBI MPC Meeting February 2025: Repo Rate Cut by 25 Bps

In RBI MPC Meeting Reserve Bank of India announced its first repo rate cut by 25 bps in 5 years during its 53rd Monetary Policy Committee meeting. Under the leadership of newly appointed Governor Sanjay Malhotra, the central bank has taken these steps to balance growth with inflation control.

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RBI MPC Meeting: RBI Reduces Repo Rate by 25 bps

In the RBI MPC Meeting, unanimously decided to reduce the policy repo rate by 25 basis points to 6.25% from the current 6.50%, the first rate cut since May 2020. This reduction comes after a long pause that began in May 2023, following a series of rate hikes triggered by the Russia-Ukraine war. Standing deposit facility (SDF) rate adjusted to 6.00%, while the marginal standing facility (MSF) rate and Bank Rate stand at 6.50%. This move by the RBI in the MPC meeting shows the RBI's confidence in the economy's stability.

RBI MPC Meeting: Growth Outlook

In the RBI MPC Meeting, the central bank forecasts a real GDP growth of 6.4% for 2024-25, with an even stronger outlook of 6.7% for 2025-26. This strategic approach is expected to be driven by multiple factors, including strong household consumption and the recent tax relief measures in the Union Budget 2025.

RBI MPC Meeting: Inflation Management

RBI MPC Meeting highlights a positive inflation outlook, with headline inflation easing from its October 2024 peak of 6.2%. In the meeting, RBI projected CPI inflation at 4.8% for 2024-25, further more declining to 4.2% in 2025-26. This improvement is driven by lower food inflation, especially in vegetables, and favorable agricultural prospects. However, the central bank remains cautious about risks from global market volatility and energy prices.

RBI MPC Meeting: Additional Measures

• The RBI meeting concluded with an announcement to set up a comprehensive review of trading and settlement timings in RBI-regulated markets is underway.
• In the RBI MPC Meeting, it announced that it will introduce an exclusive domain name for financial sector entities to prevent fraud.
• The mining and electricity sectors are rebounding, while manufacturing is expected to recover gradually.
• Agri activities remain strong, contributing to overall economic resilience.

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