The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) on Friday with a majority of 4:2 decided to keep the repo rate unchanged at 6.5 per cent and keep the ‘Neutral’ stance.
Announcing the decision, Governor Shaktikanta Das said the Standing Deposit Facility (SDF) rate remains at 6.25 per cent and the Marginal Standing Facility (MSF) rate and the Bank Rate at 6.75 per cent.
He has announced that the RBI has also cut the Cash Reserve Ratio (CRR) by 50 basis points to 4 per cent, and said the CRR will lead to the infusion of Rs 1.16 trillion into the system.
On inflation, the Governor said for the Financial Year 2025, the CPI will be 4.8 per cent. For Q3 of FY25, it is projected at 5.7 per cent ; while for the Q4, it is 4.5 per cent.
Further, for the Q1 of FY26, the CPI is projected at 4.6 per cent while at 4 per cent for the Q2 .
He said that going forward, food inflation is likely to soften in Q4 with seasonal easing of vegetables prices and kharif harvest arrivals; and good soil moisture conditions along with comfortable reservoir levels auguring well for rabi production.
The RBI also cut the GDP growth projection to 6.6 per cent from 7.2 per cent for FY25. The Real GDP growth for Q3 is projected at 6.8 per cent, while 7.2 per cent for Q4 of the fiscal.
The MPC noted that the near-term inflation and growth outcomes in India have turned somewhat adverse since the October policy. Going forward, however, economic activity is set to improve along with rising business and consumer sentiments, as reflected in the Reserve Bank’s surveys.
Governor Das said on the supply side, the growth in gross value added (GVA) during Q2 was aided by resilient services and improving agriculture sector, but weakness in industrial activity – manufacturing, electricity and mining – tempered overall growth.
Looking ahead, robust kharif foodgrain production and good rabi prospects, coupled with an expected pickup in industrial activity and sustained buoyancy in services augur well for private consumption, he added.
As per the RBI statement, Saugata Bhattacharya, Dr Rajiv Ranjan, Dr Michael Debabrata Patra and Shaktikanta Das voted to keep the policy repo rate unchanged at 6.50 per cent while Dr Nagesh Kumar and Professor Ram Singh voted to reduce the policy repo rate by 25 basis points.