RBI MPC Meeting 2025 Highlights: RBI Governor Sanjay Malhotra-led MPC delivers first repo rate cut in 5 years

RBI MPC Highlights: Here are the key takeaways of the February RBI Policy today:

1] Policy Measures:

• Repo rate cut by 25 bps to 6.25%
• Policy stance unchanged at ‘Neutral’
• SDF rate reduced to 6.00%
• MSF rate reduced 6.50%
• Bank Rate reduced to 6.50%
• CRR unchanged at 4%
• MPC members unanimously voted to reduce the policy repo rate

2] GDP Growth Estimates:

RBI projects FY26 GDP growth at 6.7%; Here are quarterly estimates:

• FY26 at 6.7%
• Q1FY26 at 6.7%
• Q2FY26 at 7.0%
• Q3FY26 at 6.5%
• Q4FY26 at 6.5%

3] CPI Inflation Forecast

CPI inflation for FY25 is projected at 4.8% with Q4FY25 at 4.4%

CPI inflation for FY26 is projected at 4.2%; Here are quarterly projections:

• Q1FY26 at 4.5%
• Q2FY26 at 4.0%
• Q3FY26 at 3.8%
• Q4FY26 at 4.2%

4] Additional Measures

• Introduction of forward contracts in Government securities
• Access of SEBI-registered non-bank brokers to NDS-OM
• Comprehensive review of trading and settlement timings across various market segments
• Introduction of ‘bank.in’ exclusive Internet Domain for Indian banks and ‘fin.in’ domains for other non-bank entities
• Enabling Additional Factor of authentication in cross-border Card Not Present transactions

RBI MPC Live Updates: We think that the RBI will carry through with further rate cuts in April and thereafter. However, this rate cutting cycle may be shallow. Importantly, a study by the RBI had indicated that the ideal real interest rate for the economy should be 100-150 bps. Given that there is now expectation for the economic growth to slump, we think that the RBI could be happy at keeping the real interest rate at 150 bps than at 100 bps. With inflation forecast for FY26 at 4.2%, a 150-bps real rate means that the repo rate can go down to 5.75%. Thus, my base case is for the terminal repo rate at 5.75% (another 50 bps cut from here on) and in the event that the RBI would want to make an insurance cut, the terminal rate can at best be at 5.50% (75 bps from here on), said Indranil Pan, Chief Economist – YES BANK.

RBI MPC Live Updates: While the policy rate was reduced, the MPC kept the stance unchanged at neutral. This could imply a more cautious approach towards the extent of rate cuts going forward in this rate cutting cycle. The stance also suggests that while the central bank is likely to provide sufficient liquidity – both transient and durable -- to the system, it has abstained from providing a liquidity bonanza. Therefore, lingering pressures on liquidity could weigh on the transmission process for now.

The pressure on liquidity conditions is anticipated to linger on as we move into the end of the month and year-end drags including advance tax outflows weigh in. We expect this to be met by appropriate liquidity infusion measures including further OMOs, buy/sell swaps and longer duration repos.

We expect the RBI to frontload its rate cuts and deliver another rate cut in the April policy of 25 bps. The space for rate cuts beyond this would hinge on how domestic and global headwinds pan out, said Sakshi Gupta, Principal Economist, HDFC Bank.

RBI MPC Live Updates: Policymakers may also want to keep sufficient tools in reserve and not use them all in one go, especially as global dynamics are very fluid and tricky, implying the need to ensure enough tools to react in times of stress.

However, we maintain that after easing in February 2025, system liquidity will turn ugly to the tune of ~ ₹2.5 trillion+ by end-March 2025, sans any additional liquidity measures. This implies more measures are on the anvil if RBI finds this level of deficit uncomfortable for policy transmission, especially as the depth of the cut cycle is still arguable.

We expect more OMOs in primary/secondary markets, followed by VRRs and more FX swaps, especially as the RBI’s forward book is heavy with large near-term maturity (~$68 billion outstanding as of Dec'24). We expect additional OMO purchases of ~ ₹30,000 crore ahead, implying net OMOs of ~ ₹90,000 - 95,000 crore+ in FY25E, said Madhavi Arora, Chief Economist, Emkay Global Financial Services.

RBI MPC Live Updates: As the government pursues fiscal consolidation, aiming for a fiscal deficit of 4.8% of GDP for the current year and targeting a further reduction to 4.4% in 2025-26, this rate cut reflects a proactive approach to fostering a conducive environment for investment and boosting consumer confidence. Despite ongoing concerns over inflation, particularly with a weakening rupee, this adjustment underscores the RBI’s commitment to balancing growth with fiscal stability. With the economic growth estimate for FY26 now at 6.7%, this strategic decision is likely to enhance the overall economic outlook and promote a sustained recovery in the year ahead, said Ashwani Dhanawat – ED and Chief Investment Officer, Shriram General Insurance

RBI MPC Live Updates: Monetary easing is the need of the hour, from a trying to revive the economy perspective. For monetary easing to be effective, more rate cuts are needed for a long period of time. Liquidity needs to be easy as well. I feel that the inflation projection of 4.2% for FY26 is a tad optimistic. I expect further rate cuts of 50 bps during the year. It is a bold move by the RBI. The short-term funds are likely to perform better. The long end of the curve will move lower once the inflation battle is won, which is some time away. There is pressure on currency as well, which will make interest rates volatile, though within a range, said Sandeep Bagla, CEO, TRUST Mutual Fund.

RBI MPC Live Updates: The key takeaway for us in the meeting was the central bank’s indication of following a flexible approach to the “flexible inflation targeting” model which essentially means that the future monetary policy would be more forward looking. In the current uncertain global and macro context, the inflation and growth forecast for FY26 looks promising, with the RBI putting its weight behind for a proactive liquidity management, evident from its desire for increased participation in the call money market. Going forward, we expect a shallow rate cut cycle from the central bank, with expectations of an additional 25 basis points rate cut in April monetary policy meeting along with additional liquidity measures in the near term considering the expected tight liquidity conditions in March 2025, said Abhishek Pandya, Research Analyst, StoxBox.

RBI MPC Live Updates: RBI’s stance on cryptocurrencies remains unchanged. RBI’s understanding on cryptos will not change based on what policy has been taken by some country, says RBI DG Rabi Sankar.

RBI MPC Live Updates: The Union Budget 2025 is excellent from both, growth and inflation perspectives. Tax relief will not have any major impact on inflation, says Governor Sanjay Malhotra.

RBI MPC Live Updates: Global uncertainties are our higher worries. It is because that has a direct impact on growth, investment decisions, and consumption expenditure that get deferred. Global uncertainties are the underlying cause for appreciation of the dollar.

RBI MPC Live Updates: RBI’s GDP forecast takes into account impact of rupee depreciation, says RBI Governor Malhotra 

RBI MPC Live Updates: There is no timeframe for Expected Credit Loss norms. ECL is still a discussion paper and the draft is not out yet.  There is an overlap between ECL and Project Finance norms, says RBI Governor Sanjay Malhotra.

RBI MPC Live Updates: LCR norms not to be implemented before March 31, 2026. We will give sufficient timeframe to implement LCR guidelines. We do not want to cause disruption and will ensure a smooth transition.

RBI MPC Live Updates: India can achieve 7% GDP growth rate, says RBI Governor Malhotra 

RBI MPC Live Updates: We will be proactive in providing as much liquidity as required. We are always watchful and we will be nimble in providing liquidity, says RBI Governor Sanjay Malhotra 

RBI MPC Live Updates: The budget has provided essential fiscal support while upholding fiscal discipline, and the RBI has reinforced this by initiating monetary easing. The inflation outlook appears favorable due to healthy kharif season production and encouraging prospects for the rabi season, providing the comfort to prioritize growth. We expect the RBI to cut rates by another 50–75 basis points in the current cycle. Additionally, we expect the RBI to maintain liquidity near neutral, using Open Market Operations (OMOs), FX swaps, or term variable rate repos as needed, said Vikram Chhabra, Senior Economist, 360 ONE Asset.

RBI MPC Live Updates: While the rate cut was clearly subjective, the lack of specifics on liquidity could potentially impede transmission. While yields have moved up a bit, it is anticipated that the RBI would continue to ensure targeted infusion of liquidity over the coming months that should enable yields to stay anchored. Overall, the weaker than anticipated growth over the previous year and projection on CPI for FY26 closer to the target has provided confidence to the RBI to ease rates, said Rajeev Radhakrishnan, CIO - Fixed Income, SBI Mutual Fund.

RBI MPC Live Updates: Home sales for the affordable and lower mid-income segment have been affected by declining affordability. The impact of increasing prices in the recent past and elevated interest rates have impacted the housing sales in this segment, as it is quite sensitive to movements in interest rates and prices. A rate cut was definitely needed to uplift sentiment and define a direction for the near future.

RBI’s rate cut along with the Government’s Budget initiatives like providing tax benefits across tax slabs, provisions on self-occupied houses, SWAMIH Fund 2, etc will aid in maintaining the housing demand momentum and drive a sustained sales growth, said Amit Bhagat, Co-Founder, CEO and MD, ASK Property Fund.

RBI MPC Live Updates: An emphasis on the flexibility of the inflation targeting framework suggests the MPC might be more tolerant of intermittent modest supply driven volatility. The GDP forecasts point to growth staying below 7% this year and the next. This sees the RBI joining regional central banks who have given higher weightage to domestic priorities, viewing volatility in their currency and bond markets as driven by global triggers. The MPC has refrained from an outright dovish signal by maintaining the stance at neutral. The recent rupee depreciation was not a hurdle for the policymakers, with intervention tools likely to be tapped to defend the currency vs dollar strength. We maintain our call for another 25 bps cut in repo rate in April, said Radhika Rao, Executive Director and Senior Economist, DBS Bank.

RBI MPC Live Updates: The Indian stock market benchmark indices, Sensex and Nifty 50, are trading flat amid volatility after the announcement of RBI policy. The Sensex recovered losses to trade 8.46 points, or 0.01%, higher at 78,066.62, while the Nifty 50 was up 17.65 points, or 0.07%, at 23,621.00.

RBI MPC Live Updates: The Indian economy, though continuing to remain strong and resilient, also did not remain immune to these global headwinds, with the Indian Rupee coming under depreciation pressure in the recent months. At the Reserve Bank, we have been employing all tools at our disposal to face the multi-pronged challenges, RBI Governor Sanjay Malhotra said.

RBI MPC Live Updates: The Negotiated Dealing System – Order Matching (NDS-OM) is an electronic trading platform for secondary market transactions in government securities. Access to NDS-OM is, at present, available to regulated entities and to the clients of banks and standalone primary dealers. With a view to widening access, RBI has decided that non-bank brokers registered with SEBI can directly access NDS-OM, on behalf of their clients. These brokers may access NDS-OM subject to the regulations and conditions laid down by the Reserve Bank in this regard.

RBI MPC Live Updates: Synchronized and complimentary market and settlement timings across various financial market segments can facilitate benefits of efficient price discovery and optimization of the liquidity requirements. Accordingly, it has been decided to set up a working group with representation from various stakeholders to undertake a comprehensive review of trading and settlement timing of financial markets regulated by the Reserve Bank. The Group is expected to submit its report by April 30, 2025, RBI Governor announced.

RBI MPC Live Updates: RBI to introduce forward contracts in Government securities to enable further market development. Such forward contracts will enable long-term investors such as insurance funds to manage their interest rate risk across interest rate cycles. They will also enable efficient pricing of derivatives that use bonds as underlying instruments. Draft directions in this regard were issued in December 2023. The final directions, taking into account the public feedback, will be issued shortly, said RBI Governor Sanjay Malhotra.

RBI MPC Live Updates: The Reserve Bank is committed to provide sufficient system liquidity. We have taken a number of steps in this regard. We will continue to monitor the evolving liquidity and financial market conditions and proactively take appropriate measures to ensure orderly liquidity conditions, said RBI Governor Sanjay Malhotra.

RBI MPC Live Updates: Here’s a look at latest RBI policy rates:

• Repo rate at 6.25%
• Standing Deposit Facility (SDF) at 6%
• Marginal Standing Facility (MSF) at 6.5%
• Bank Rate at 6.5%
• Reverse repo rate at 3.35%
• CRR at 4.5%

RBI MPC Live Updates: CPI inflation for FY25 is projected at 4.8% with Q4FY25 at 4.4%. Assuming a normal monsoon next year, CPI inflation for FY26 is projected at 4.2% .

• Q1FY26 at 4.5%
• Q2FY26 at 4.0% 
• Q3FY26 at 3.8%
• Q4FY26 at 4.2%

RBI MPC Live Updates: RBI projects FY26 GDP growth at 6.7%; Here are quarterly updates:

• FY24 at 6.7%
• Q1FY26 at 6.7%
• Q2FY26 at 7.0%
• Q3FY26 at 6.5%
• Q4FY26 at 6.5%

RBI MPC Live Updates: RBI expects India’s growth projection for FY26 at 6.7%. Real GDP growth for FY26 is projected at 6.75%, with Q1 at 6.7%; Q2 at 7%; Q3 and Q4 at 6.5% each.

RBI MPC Live Updates: RBI MPC decided to slash repo rate by 25 basis points (bps) to 6.25% from 6.50%. The MPC also decided to maintain the ‘Neutral’ stance, announced RBI Governor Sanjay Malhotra.

RBI MPC Live Updates: RBI cuts repo rate by 25 basis points (bps) to 6.25%, delivers first repo rate cut in nearly five years.

RBI MPC Live Updates: The resolutions of the Monetary Policy Committee (MPC) impact the lives of all citizens of the country. It is of relevance to businesses, economists and all parties. The inflation targeting framework has served the economy well. Inflation has come down, says RBI Governor Sanjay Malhotra

RBI MPC Live Updates: RBI Governor Sanjay Malhotra begins his monetary policy speech. All focus will on on repo rate cut decision

RBI MPC Live Updates: Watch RBI Governor Sanjay Malhotra's first Monetary Policy speech LIVE here

RBI MPC Live Updates: Balancing and counterbalancing all macro and geopolitical factors, we believe there remains space for 25 bps rate cut by RBI in the upcoming policy. The cumulative cut in the entire cycle could be ~50-75 bps. The underlining fiscal consolidation and softening inflation provides further headroom for RBI to focus on growth, said Dipanwita Mazumdar, Economist at Bank of Baroda.

RBI MPC Live Updates: While a conventional 25 bps rate cut in the RBI MPC policy is less of a market debate, the actions around 'what beyond a cut' will be more watched. Easing by stealth via unconventional policy tools like liquidity and regulatory measures will continue. The RBI may also want to address the stress in the non-sovereign money market. We expect another round of ~ ₹30,000 crore OMOs, implying ₹90,000 crore+ in total in FY25E. A CRR cut is a close call, but a temporary cut may not address the underlying banking stress. Easing in ensuing tighter LCR norms (April 2025 onwards) and lending standards might be a preferred policy tool. We will also watch for additional capital account easing actions via the FCNR route, said Madhavi Arora, Lead Economist at Emkay Global Financial Services.

RBI MPC Live Updates: The Indian stock market benchmark indices opened marginally higher ahead of the announcement of RBI policy today. The Sensex was trading above 78,000 level, while the Nifty 50 was above 23,600.

RBI MPC Live Updates: Rupee opens 0.1% higher ahead of the RBI policy announcement today. The local currency opened 12 paise higher at 87.45 per US Dollar as against its previous close of 87.5775 per USD.

RBI MPC Live Updates: Economists believe RBI in its February policy is expected to encounter a trilemma encompassing tighter liquidity conditions, depreciating rupee and heightened geopolitical uncertainty. The risks were not so profound in the last policy which expressed concerns about missing growth forecast and transient risks of inflation resulting in the misalignment of the 4% target.

RBI MPC Highlights: Here are the key takeaways of the December RBI Policy today:

1] Policy Measures:

• Repo rate unchanged at 6.5%
• Policy stance unchanged at ‘Neutral’
• SDF rate unchanged at 6.25%
• MSF rate unchanged at 6.75%
• Bank Rate unchanged at 6.75%
• MPC members voted by 4:2 majority to maintain status quo
• CRR cut by 50 bps to 4%
• CRR cut to release ₹1.16 lakh crore into banking system in two tranches

2] GDP Growth Estimates:

FY25 GDP growth estimates cut to 6.6% from 7.2% earlier. Quarterly GDP growth estimates are -

FY25: Cut to 6.6% from 7.2%

• Q3FY25: Cut to 6.8% from 7.4%
• Q4FY25: Cut to 7.2% from 7.4%
• Q1FY26: Cut to 6.9% from 7.3%
• Q2FY26: At 7.3%

3] CPI Inflation Forecast

FY25 CPI inflation target raised to 4.8% from 4.5%. Quarterly inflation forecast are -

• FY25: Raised to 4.8% from 4.5%
• Q3FY25: Raised to 5.7% from 4.8%
• Q4FY25: Raised to 4.5% from 4.2%
• Q1FY26: Raised to 4.6% from 4.3%
• Q2FY26: At 4%

4] Additional Measures

• FX-Retail platform to be linked with the Bharat Connect platform of NPCI
• Introduction of the Secured Overnight Rupee Rate (SORR) – a benchmark based on the Secured Money Markets
• Limit for collateral-free agriculture loans to be raised to ₹2 lakh per borrower from ₹1.6 lakh
• Small Finance Banks permitted to extend pre-sanctioned credit lines through the UP
• Setting up of a Committee to recommend Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector
• Introduction of Podcast Facility as an Additional Medium of Communication
• Launch of MuleHunter.AI, an AI solution to identify Mule Bank Accounts
• Launch of ‘Connect 2 Regulate’ – An initiative for open regulation

RBI MPC Live Updates: Economists expect the central bank to begin a shallow rate cut cycle today, and announce its first repo rate cut in five years. RBI is widely expected to reduce the benchmark repo rate by 25 basis points (bps) to 6.25% from 6.5%.

RBI MPC Live Updates: The last repo rate cut by RBI was announced in May 2020, when the central bank lowered the repo rate to 4%. Subsequently, the RBI raised interest rates seven times, reaching 6.50%. The rate has remained unchanged since February 2023

RBI MPC Live Updates: The RBI is expected to encounter a trilemma encompassing tighter liquidity conditions, depreciating rupee and heightened geopolitical uncertainty. However, the underlining fiscal consolidation and softening inflation provides further headroom for RBI to focus on growth, economists said.

RBI MPC Live Updates: The meeting of the Monetary Policy Committee (MPC) headed by the new RBI Governor Sanjay Malhotra was scheduled from February 5 to 7 and the credit policy decision will be announced today, February 7. RBI Governor Sanjay Malhotra will begin his monetary policy speech at 10:00 AM. The post-policy press conference by the RBI Governor will be held at 12 PM.

RBI MPC Live Updates: This will be the first RBI policy under the new Governor Sanjay Malhotra and also the first RBI MPC meeting after the Union Budget 2025-2026 was presented on February 1.

RBI MPC Live Updates: The Reserve Bank of India (RBI) is set to announce its sixth and the last bi-monthly monetary policy of FY25 today. The meeting of the Monetary Policy Committee (MPC) headed by the new RBI Governor Sanjay Malhotra was scheduled from February 5 to 7 and the credit policy decision will be announced today.