The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) on Friday ‘unanimously’ decided to reduce the policy rate by 25 bps from 6.50 per cent to 6.25 per cent.
Governor Sanjay Malhotra has pegged the GDP for FY26 at 6.7 per cent . For Q1: 6.7 per cent; Q2: 7 per cent; Q3: 6.5 per cent; and Q4: 6.5 per cent .
He said that on the supply side, growth is supported by the services sector and a recovery in the agriculture sector, while tepid industrial growth is a drag.
Governor Malhotra announced that the standing deposit facility (SDF) rate shall be at 6.0 per cent, and the marginal standing facility (MSF) rate, and the bank rate shall be 6.5 per cent.
He said the CPI inflation for 2024-25 is projected at 4.8 per cent with Q4 at 4.4 per cent.
Assuming a normal monsoon next year, CPI inflation for 2025-26 is projected at 4.2 per cent with Q1 at 4.5 per cent; Q2 at 4 per cent; Q3 at 3.8 per cent; and Q4 at 4.2 per cent .
The MPC noted that inflation has declined. Supported by a favourable outlook on food and continuing transmission of past monetary policy actions, it is expected to further moderate in 2025-26, gradually aligning with the target.
The RBI Governor also highlighted the flexible inflation targeting (FIT) framework saying that it was put in 2016, reviewed in 2021, and is a monumental change in the history of the monetary policy of a country.
“The average inflation has been lower after this framework barring a few occasions of breaching the upper tolerance band,” he said.
On the external sector, the Governor said India’s current account deficit (CAD) moderated from 1.3 per cent of GDP in Q2 of last year to 1.2 per cent in Q2 of this year.
The RBI MPC has also set out various developmental and regulatory policy measures relating to Financial Markets, Cybersecurity, and Payment Systems.
It announced the introduction of forward contracts in Government securities. The Governor also said that SEBI-registered non-bank brokers will now have access to the Negotiated Dealing System—Order Matching (NDS-OM).
Also, a comprehensive review of trading and settlement timings across various market segments will also be conducted.
In the cybersecurity space, the focus will be on enhancing trust through ‘bank.in’ and ‘fin.in’ domains.
Further, it announced enabling additional authentication factors for international card-not-present (online) transactions.