RBI Cuts Repo Rate by 25 Bps: 5 Key Insights from April MPC Meeting Focused on Growth

In a strategic move reflecting global uncertainties and potential weather-related challenges, the Reserve Bank of India (RBI) has opted for a cautious approach by reducing the repo rate by 25 basis points, bringing it down to 6%. This decision, announced on April 9, 2025, was made during a meeting of the six-member Monetary Policy Committee (MPC), which voted unanimously for the adjustment.

Key Highlights from RBI’s April Monetary Policy Meeting

The MPC convened on April 7, 8, and 9, 2025, to assess and determine the monetary policy stance. Here are the critical takeaways from the meeting:

1. Repo Rate Adjustment and New Stance

RBI Governor Sanjay Malhotra revealed that the repo rate would now stand at 6%. Following this cut, the Standing Deposit Facility (SDF) rate is adjusted to 5.75%, while the Marginal Standing Facility (MSF) rate and the bank rate are set at 6.25%. Notably, the committee shifted its policy stance from ‘neutral’ to ‘accommodative’, indicating a more supportive approach to economic growth.

2. Inflation Forecasts Remain Optimistic

The RBI has revised its inflation projections for the financial year 2025-26, lowering the estimate to 4%, down from 4.2%. The anticipated inflation rates for each quarter are as follows:

Q1: 3.6% (previously 4.5%)
Q2: 3.9% (previously 4%)
Q3: 3.8% (unchanged)
Q4: 4.2% (previously 4.4%)

Governor Malhotra commented, “The risks surrounding CPI inflation are evenly balanced, positioning us for stable growth.”

3. Revised Growth Projections

In light of changing economic conditions, the RBI has adjusted its GDP growth estimate for FY26 to 6.5%, down from the earlier 6.7% projection. The quarterly growth estimates have also been revised:

Q1: 6.5% (previously 6.7%)
Q2: 6.7% (previously 7%)
Q3: 6.6% (previously 6.5%)
Q4: 6.3% (previously 6.5%)

Governor Malhotra reiterated, “Real GDP growth is expected to be 6.5% for 2025-26, with risks evenly balanced across the quarters.”

Conclusion

As the RBI navigates the complexities of both domestic and international economic landscapes, these adjustments signal a commitment to fostering stability and growth. Stakeholders and investors should stay tuned for further developments as the RBI continues to monitor the evolving economic conditions. For more insights and updates on market trends, check out our comprehensive financial news section.