RBI MPC Meeting: RBI slashes FY26 GDP growth outlook to 6.5% from 6.7%

RBI MPC Meeting: The Reserve Bank of India, in its first policy meeting of the financial year 2025-26 (FY26), on Wednesday, April 9, slashed the real economic growth outlook amid rising global concerns following the implementation of tariffs by US President Donald Trump.

Governor Sanjay Malhotra-led RBI MPC slashed the real GDP growth projection to 6.5% from 6.7% earlier.

The RBI slashed the growth for Q1 FY26 to 6.5% from 6.7% earlier, and for Q2 FY26 to 6.7% (from 7% earlier). As for Q3 FY26, it slightly raised the GDP growth outlook to 6.6% from 6.5% earlier but lowered it for Q4 FY26 to 6.3% from 6.5%.

“The global economic outlook is fast changing. The recent trade tariff-related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation,” said the RBI Governor in his speech.

Malhotra highlighted the strength in India's rural economy, recovery in the industrial sector and resilience in the services sector, while flagging the headwinds from global trade disruptions, which continue to pose downward risks.

RBI slashes repo rate for 2nd time in a row

The central bank also slashed its key interest rate by 25 basis points to 6%, the second such rate cut in a row, to support the economy amid tariffs imposed by the US. It also changed its monetary policy stance to "accommodative" from “neutral”.

In February this year, the MPC had slashed the repo rate by 25 basis points to 6.25% for the first time since May 2020. The last revision of rates happened in February 2023 when the policy rate was hiked by 25 basis points to 6.5 per cent.

The latest round of rate cuts by the RBI will provide further relief to the home, auto and corporate loan borrowers.

The minutes of the MPC’s meeting will be published on April 23, 2025, while the next meeting of the MPC is scheduled from June 4 to 6, 2025.