RBI Repo Rate Cut: Earlier in February, the Reserve Bank of India’s six-member monetary policy committee (MPC) announced its first rate cut since May 2020 amid a slowdown in the economy.
Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that the Monetary Policy Committee (MPC) has unanimously decided to reduce the policy rate by 25 basis points (bps), from 6.25 per cent to 6 per cent.
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Earlier in February, the Reserve Bank of India’s six-member monetary policy committee (MPC) announced its first rate cut since May 2020 amid a slowdown in the economy.
All experts had suggested that the RBI is expected to cut its benchmark repo rate by 25 basis points (bps) to 6.00 per cent at the conclusion of its April 7-9 meeting.
The US imposed a 26 per cent tariff on Indian imports and is expected to reduce India’s GDP growth for FY 2025-26 by 20–40 basis points, potentially lowering it to around 6.1 per cent from the RBI’s earlier forecast of 6.7 per cent.
Experts are of the view that this is one of the key reasons why the RBI has decided to further cut rates, as it will help counter economic strain.
Growth Forecast
The RBI governor said that the GDP growth rate this year is expected to be around 6.5 per cent.
“Real GDP is now projected for this fiscal year at 6.5 per cent in the first quarter, 6.7 per cent in the second quarter, 6.6 per cent in the third quarter and 6.3 per cent in the fourth quarter,” he said.
“This is on top of a 9.2 per cent growth rate observed in the previous year,” he added. Malhotra also said that the current year prospect of the agriculture sector remains bright on the back of healthy reservoir levels and robust crop production.
CPI Inflation
The RBI has also revised the consumer price index or CPI inflation forecast to 4 per cent from 4.2 per cent earlier.
“CPI inflation in Q1 is expected to be at 3.6 per cent, Q2 at 3.9 pr cent, Q3 at 3.8 per cent and q$ slightly higher at 4.4 per cent and the risks are evenly balanced,” Malhotra said.
