RBI MPC Meeting 2025 Highlights: Repo rate cut by 25 basis points to 6.25%, says RBI governor Sanjay Malhotra; GDP growth projected at 6.7% - loan EMIs likely to come down

"The RBI's first monetary policy decision under the new governor signals a promising start, with the unanimous repo rate cut underscoring the central bank's commitment to supporting growth. The governor's emphasis on monitoring global developments demonstrates a proactive approach, while the downward revision of growth expectations aligns with domestic economic realities. As the RBI charts a course balancing growth and stability, its data-driven approach and ability to adapt to evolving conditions will be crucial in steering the economy through challenges and opportunities ahead,” says Rishi Shah, Partner & Senior Economist, Grant Thornton Bharat.

As expected, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) cut rates for the first time since May 2020. The recent easing in consumer price index (CPI) inflation, and the need to remain supportive of economic growth moved Mint Road.

However, it maintained the policy stance at ‘neutral,’ which gives it flexibility to remain data dependent and respond to exigencies.

With the Trump Administration in the US shaking up global markets, expect the RBI to be proactive in using liquidity and forex management tools.
The tariff war set off will have a bearing on policy rate cuts worldwide.

S&P Global expects the US Federal Reserve to move more gradually, cutting just 25 basis points (bps) in the first half of 2025 after slicing 100 bps between September and December 2024.

The MPC moves will depend more on domestic inflation. We expect healthy kharif and rabi crop to ease food inflation and likely drive CPI inflation down to 4.4% next fiscal.

Elevated rates have impacted India’s GDP growth this fiscal. The Budget for next fiscal is mildly supportive for growth, while continuing on the fiscal consolidation path.

We expect the MPC to cut another 75-100 bps off the policy rate next fiscal.

Risks from weather and US tariff policy will have a bearing on this, says Dharmakirti Joshi, Chief Economist, Crisil Limited.

First, the rapid digitalisation of financial services has brought convenience and efficiency but has also increased exposure to cyber threats and digital risks, which are getting sophisticated day by day. The surge in digital frauds is a matter of concern, warranting action by all stakeholders.

The Reserve Bank has been taking various measures to enhance digital security in the banking and payments system. Introduction of Additional Factor of Authentication (AFA) for domestic digital payments is one such measure. It is proposed to extend AFA to online international digital payments made to offshore merchants, who are enabled for such authentication.

Second, the Reserve Bank shall implement the 'bank.in' exclusive Internet Domain for Indian banks. Registration of this domain name will commence from April this year. This will help avoid banking frauds. This will be followed by the ‘fin.in’ domain for the financial sector.

Banks and NBFCs must continuously improve preventive and detective controls to mitigate cyber risks. They must develop robust incident response and recovery mechanisms, reinforced through periodic testing, for operational resilience, said RBI governor Sanjay Malhotra.

In a landmark decision, the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) has reduced the benchmark interest rate by 25 basis points, the first cut in five years, aiming to stimulate economic growth while closely monitoring inflation. This move aligns with global central banks, which have been easing rates since last year to counter economic slowdowns. However, this decision is expected to widen the gap between US and Indian bond yields, potentially accelerating capital outflows from India. With US bond yields on an upward trajectory, the Indian Rupee (INR) is facing added depreciation pressure, exacerbating currency risks. Given these challenges, the rate cut could prove to be a balancing decision on currency stability and stimulating consumption,” says Umeshkumar Mehta, CIO, SAMCO Mutual Fund.

Reserve Bank Governor Sanjay Malhotra on Friday said the exchange rate policy has remained consistent over the years and the central bank does not target any 'specific level or band' of the rupee, which slipped to an all-time low of 87.59 to a US dollar. On Thursday, the rupee plunged 16 paise to close at a record low of 87.59 against the American currency.
"I would like to mention here that the Reserve Bank's exchange rate policy has remained consistent over the years. Our stated objective is to maintain orderliness and stability, without compromising market efficiency," he said while unveiling the outcome of the Monetary Policy Committee meeting.

Accordingly, he said, "our interventions in the forex market focus on smoothening excessive and disruptive volatility rather than targeting any specific exchange rate level or band. The exchange rate of the Indian rupee is determined by market forces."

The rupee has declined about 2 per cent so far this year. It depreciated by 3.2 per cent against the dollar since November 6, 2024, the day US presidential election results were announced, largely mirroring the 2.4 per cent appreciation in the dollar index during the same period.

The forex reserve has seen a decline of USD 45 billion in the last 3 months partly due to RBI's intervention in the forex market. The forex kitty stood at USD 675.65 billion as on November 8, 2024.

As on January 31 this year, India's foreign exchange reserves stood at USD 630.6 billion, up from USD 629.55 billion in the preceding week, providing an import cover of over 10 months.

With receding expectations on the size and pace of rate cuts in the US, the US dollar has strengthened and bond yields have hardened, he said, adding, Emerging Market Economies (EMEs) have witnessed large capital outflows, leading to sharp depreciation of their currencies and tightening of financial conditions. (PTI)

“As widely expected, the MPC has cut the Repo Rate by 25 bp to 6.25%. However, there was no forward guidance on policy rates. The stance is maintained at neutral. The RBI Governor has promised liquidity support as and when needed. That probably means the banking system liquidity will be proactively managed in Q4FY25,” says Dhawal Dalal, President & CIO-Fixed Income, Edelweiss MF.

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group’s take on the RBI MPC.

• In line with our expectations, the RBI, in its first MPC meeting of 2025, started easing monetary policy as the MPC unanimously decided to reduce the policy rate by 25 bps from 6.5% to 6.25%. The decision to cut the rate came from the RBI after nearly five years. While delivering the rate cut, the MPC highlighted that its policy stance will continue to remain neutral.

• The Standing Deposit Facility (SDF) rate was also reduced by 25 bps to 6% from 6.25%.

• Given that headline inflation is gradually moving towards the RBI's target range, with easing pressure from food prices, the RBI projected headline inflation for FY25 at 4.8%, while the projection for FY26 remains unchanged at 4.2%.

• While the RBI maintained its FY25 growth forecast at 6.4%, it revised India's FY26 GDP growth projection from 6.6% to 6.7%.

• Given the prevailing economic policy uncertainty amid trade tensions, an upside risk to inflation remains. Therefore, the RBI stated that it will continue to maintain a neutral stance while keeping a close watch on the global environment.

Sujan Hajra’s views:

In line with our expectations, the RBI cut the policy rate by 25 bps to support domestic growth, as headline inflation is gradually moving towards its target range. Although the global environment remains volatile, the RBI made a prudent decision to lower the policy rate, considering domestic factors while keeping an eye on global developments.

Recently, the government has also initiated pro-consumption measures, such as tax relief in the FY26 budget, which will positively impact growth. Now, with the RBI joining hands with the central government through its monetary policy to ease borrowing costs, further support to growth is expected. Keeping these positive measures in mind, we continue to remain firm on our 7% GDP growth forecast for FY25.

RBI governor Sanjay Malhotra, when asked about the possibility of Indian economy growing at 7%, said that ‘I want to stick my neck out and say that 7% growth is possible and we should strive for it.

"The RBI has cut policy rates by 25 bps while maintaining a neutral stance, with no CRR cut. A more flexible approach to rate targeting suggests the central bank may not wait for CPI to hit 4% before acting—marking a shift from its earlier tightrope strategy.

Liquidity management remains a priority, with the RBI committed to ensuring sufficient but not surplus liquidity, which could leave markets slightly disappointed. A back-to-back 25 bps rate cut in April is possible but contingent on the evolving liquidity scenario in the coming months,”says Unmesh Kulkarni, Managing Director Senior Advisor, Julius Baer India.

"The choice faced with the new RBI governor was a very difficult one especially that this had to be made right after taking over the reigns of the institution. Balancing growth and inflation dynamics has never been an easy choice and never will be. There are pros and cons to every choice, but I believe that the way rate reduction has been announced while also reiterating that the stance continues to be neutral is something that must be appreciated. The RBI does acknowledge that they are going to keep going back to the drawing board every 2 months to see where we stand and take a nuanced view. A difficult choice for someone to make within one month of joining, but kudos to the step that benefits the middle class."

"RBI has acknowledged that cyber security is an emerging risk and has asked banks to enhance their governance frameworks to include testing and monitoring of cyber related controls, strengthen their cyber incident response and have a robust operational resilience framework.,” says Vivek Iyer, Partner and Financial Services Risk Leader.

The RBI’s 0.25% rate cut after five long years—is the much-needed oxygen for the Indian economy, more particularly for the real estate sector. It lightens EMIs, boosts investments, and signals a pro-growth stance. Coupled with income tax breaks for incomes up to ₹12 lakh in the Union Budget, it widens the path to homeownership for many aspiring buyers, says Amit Goyal, Managing Direct, India Sotheby's International Realty.

The RBI has shifted its stance from a "withdrawal of accommodation" to a "neutral" position while maintaining the repo rate at 6.5%. This decision signals a clear focus on domestic economic conditions, prioritizing them over aligning with the U.S. Federal Reserve's rate movements. The neutral stance provides the RBI with the flexibility to adjust interest rates in response to evolving inflation dynamics.

Although Consumer Price Index (CPI) inflation has eased below 4%, upside risks persist due to unexpected weather disruptions and geopolitical uncertainties. The RBI has highlighted these factors as critical challenges to keep inflation in check. Given that the projected CPI remains above the 4% mark, the decision to keep the repo rate unchanged is a prudent move, aimed at stabilizing inflationary pressures and supporting economic stability.

With one uncertainty out of its way, the market participants will now start focusing on earnings season. Indian markets are likely to continue their recovery after the six-day losing streak. Historically, we have seen that the benchmark indices have outperformed after such corrections. We continue to have a bullish stance on the markets and expect the markets to reach the previous highs going forward, says Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.

“Today the market will be focused on the policy response from the MPC, particularly the message from the new RBI chief. Even though the INR depreciation doesn’t provide the favourable macro construct for a rate cut, the market expects the MPC to vote for a rate cut today, providing a monetary stimulus complementing the fiscal stimulus given in the Budget. Since a 25 bp rate cut is partly discounted by the market, there can be a sell off if the rate cut doesn’t materialise.

There is only limited upside for the market since the FIIs have gone back to selling mode after one day of symbolic buying. Apart from financials, IT and pharma stocks will continue to be the focus of DIIs,” says V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“We believe this decision by RBI to cut repo rate will boost investor confidence, encourage housing demand with affordability factor, and support the overall development of the real estate sector. Home buyer confidence is at an all-time high and this naturally urges consumers to invest in their dream homes as the overall climate is geared towards sustained demand. As India's economy continues to grow, there is no hesitation among the homebuyers to invest in residential real estate for long-term returns. Overall, the market outlook is certainly positive and given the confidence built in recent times, we do believe that markets will continue to see sustained growth over the next few years, providing appealing prospects for both first-time buyers and seasoned investors. Also, owing to landmark infrastructure projects by the government, the real estate market has been experiencing tremendous growth and development, gaining investor confidence across all asset classes. We definitely hope to see further lower interest rates which will provide impetus to not just real estate and housing demand but across industries and economic growth. This rate cut would also infuse much-needed liquidity into the real estate sector. We believe that the sustained demand will further solidify the sector’s upward trajectory well into 2025, cementing the Indian real estate market as a key driver of economic growth,” says Ramani Sastri, Chairman and MD, Sterling Developers.

On the demand side, rural demand continues to be on an uptrend, while urban consumption remains subdued with high frequency indicators providing mixed signals. Going forward, improving employment conditions, tax relief in the Union Budget, and moderating inflation, together with healthy agricultural activity bode well for household consumption. Government consumption expenditure is expected to remain modest.

Higher capacity utilisation levels, robust business expectations and government policy support augur well for growth in fixed investment. Continued buoyancy in services exports will support growth.

Global headwinds, however, continue to impart uncertainty to the outlook and pose downward risks. Taking all these factors into consideration, real GDP growth for the next year is projected at 6.7 per cent with Q1 at 6.7 per cent; Q2 at 7.0 per cent; Q3 at 6.5 per cent; and Q4 at 6.5 per cent. The risks are evenly balanced.

“Considering the existing growth-inflation dynamics, the MPC, while continuing with the neutral stance, felt that a less restrictive monetary policy is more appropriate at the current juncture. The MPC will take a decision in each of its future meetings based on a fresh assessment of the macroeconomic outlook.

We are committed to conduct monetary policy and take such measures, as appropriate, which are timely, carefully calibrated and clearly communicated, to facilitate conducive macroeconomic conditions that reinforce price stability, sustained economic growth and financial stability,” said RBI governor Sanjay Malhotra.

Headline inflation softened sequentially in November-December 2024 from its recent peak of 6.2 per cent in October. The moderation in food inflation, as vegetable price inflation came off from its October high, drove the decline in headline inflation. Core inflation remained subdued across goods and services components and the fuel group continued to be in deflation, said RBI governor Sanjay Malhotra.

On the domestic front, as per the First Advance Estimates (FAE), real gross domestic product (GDP) is estimated to grow at 6.4 per cent (y-o-y) in 2024-25 supported by a recovery in private consumption. On the supply side, growth is supported by the services sector and a recovery in agriculture sector, while tepid industrial growth is a drag, said RBI governor Sanjay Malhotra.

The next meeting of the Monetary Policy Committee is scheduled during April 7 to 9, 2025. This will be the first monetary policy review of the new financial year 2025-26.

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 MPC also noted that though growth is expected to recover from the low of Q2:2024-25, it is much below that of last year. These growth-inflation dynamics open up policy space for the MPC to support growth, while remaining focussed on aligning inflation with the target. Accordingly, the MPC unanimously voted to reduce the policy repo rate by 25 basis points to 6.25 per cent.

At the same time, excessive volatility in global financial markets and continued uncertainties about global trade policies coupled with adverse weather events pose risks to the growth and inflation outlook. This calls for the MPC to remain watchful. Accordingly, the MPC unanimously voted to continue with a neutral stance. This will provide MPC the flexibility to respond to the evolving macroeconomic environment.

The Monetary Policy Committee (MPC) held its 53rd meeting from February 5 to 7, 2025 under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. The MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Rajiv Ranjan, and Shri M. Rajeshwar Rao attended the meeting. After assessing the current and evolving macroeconomic situation, the MPC unanimously decided to:

* reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25 per cent with immediate effect; consequently, the standing deposit facility (SDF) rate shall stand adjusted to 6.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent;
* continue with the neutral monetary policy stance and remain unambiguously focussed on a durable alignment of inflation with the target, while supporting growth.

"The RBI’s decision to reduce the repo rate by 25 basis points to 6.25% supplements recent announcements in the budget aimed at boosting spending and spur economic growth. This supportive monetary policy was imperative, especially after the recent 50-basis-point reduction in the Cash Reserve Ratio (CRR), which has already injected significant liquidity into the banking system. As inflations continues to remain a notch higher than the medium-term target of 4%, the central bank has its task cut out - Contain inflation, inject liquidity into banking system and cut repo rates in the coming quarter too. While the current cut may have a limited direct impact, we anticipate that a further rate cut in the next MPC meeting will provide stronger impetus to overall demand, accelerating housing sales, particularly in the mid-income and affordable segments. Together, these measures signal a robust framework for sustainable growth, fostering confidence among homebuyers, developers, and investors alike” said Boman Irani, President, CREDAI National.

Stock market today: BSE Sensex and Nifty50, the Indian equity benchmark indices, opened flat in trade on Friday but moved to red after the RBI monetary policy. While BSE Sensex went below the 78,000 mark, Nifty50 was near 23,550. At 10:29 AM, BSE Sensex was trading at 77,854.16, down 204 points or 0.26%. Nifty50 was at 23,531.15, down 72 points or 0.31%.

“The Credit deposit ratio for the banking system at the end of January 2025 was at 80.8% broadly similar to that on 30th September 2024 bank liquidity buffers are sufficient, though the net interest margin moderated return on assets and return on equity are robust. The system level parameters for NBFCs too are very healthy,” said RBI governor Sanjay Malhotra.

“The Reserve Bank's exchange rate policy over the years has remained very, very consistent. Our stated objective is to maintain orderliness and stability without compromising market efficiency. The Bank believes in the market efficiency of the markets that we have in India for forex accordingly, our interventions in the forex market focus on smoothening excessive and disruptive volatility. It does not target any specific exchange rate level or band. The exchange rate of the Indian rupee is determined by market forces, and we will continue with this policy,” said RBI governor Sanjay Malhotra.

“Headline inflation, after moving above the upper tolerance band in October has since registered a sequential moderation in November and December, standing at 5.2% now going ahead. CPI inflation for the current financial year is projected at 4.8% with Q4 current quarter at 4.4%. Assuming a normal monsoon, CPI inflation for the financial year 2025-26 is projected at 4.2%, with Q1 at 4.5%, Q2 at 4%, Q3 at 3.8% and Q4 at 4.2%. The risks are evenly balanced,” said RBI governor Sanjay Malhotra .

“Manufacturing activity is expected to recover gradually in the second half of this year and beyond early corporate results for Q3 and we have more than 50% of the results now as we speak, it indicates a mild recovery in the manufacturing sector. Mining and electricity are rebounding from monsoon related disruptions in Q2 business expectations remain upbeat, as evident from the PMI manufacturing future output index, services sector activity continues to be resilient. PMI services, however, declined from its recent peak,” said RBI governor Sanjay Malhotra.

RBI governor Sanjay Malhotra announced the GDP growth outlook at 6.7% for FY 2025-26

Q1: 6.7%

Q2: 7%

Q3: 6.5%

Q4: 6.5%

The risks are evenly balanced

“The MPC also decided unanimously again to continue with the neutral stance and remain unambiguously focused on a durable alignment of inflation with the target while supporting growth. In brief, the MPC noted that inflation has declined, supported by favorable outlook on food and continuing transmission of past monetary policy action it is expected to further moderate in 2025-26 gradually aligning with the target,” said RBI governor Sanjay Malhotra.

The MPC decided unanimously to reduce the policy rate by 25 basis points from 6.5% to 6.25%. Consequently, the standing deposit facility SDF, the SDF rate shall be at 6.0% and the marginal standing facility rate, also called the MCF rate, and the bank rate shall be 6.5%, said RBI governor Sanjay Malhotra.

"Lingering geopolitical tensions and elevated trade and policy uncertainty have exacerbated financial market volatility. Such an uncertain global environment has posed difficult policy trade offs. For emerging market economies, the Indian economy though continuing to remain strong and resilient, also, did not remain immune to these global headwinds, said RBI governor Sanjay Malhotra.

RBI governor Sanjay Malhotra announced that the MPC decided unanimously to cut repo rate at 25 basis points

A 1990 batch Indian Administrative Service Officer from the Rajasthan Cadre, Sanjay Malhotra completed his Bachelor's in Computer Science from IIT Kanpur and later obtained a Master's in Public Policy from Princeton University, USA.

In his professional journey of over 33 years, he has worked across various sectors including power, finance, taxation, information technology, and mines. Before assuming charge as the RBI governor, Sanjay Malhotra was Secretary (Revenue) in the ministry of finance. He has also served as Secretary in the department of financial services under the ministry of finance, Government of India.

His comprehensive knowledge spans finance and taxation matters at both state and central government levels. In his role as revenue secretary, he plays a crucial role in developing tax policies for both direct and indirect taxation frameworks, as stated on the department of revenue website.

A Bloomberg report suggests that Malhotra's effective collaboration with the finance minister is likely to improve the coordination between monetary and fiscal policies. The successful implementation of the new income tax system during his tenure in the ministry stands out as a significant achievement.

RBI Monetary Policy Live: This year's first monetary policy review is also the first MPC meet for the newly appointed RBI governor Sanjay Malhotra. The RBI policy comes within a week of the Union Budget 2025 and at a time when experts say there is a need to get GDP growth back on track. India's economic growth has slowed to a two year low, and with inflation pressures easing, expectations are that the MPC will vote for a 25 basis points repo rate cut. All eyes are now on RBI governor Sanjay Malhotra's monetary policy statement scheduled for 10:00 AM

“The world today is characterised by intricate complexities and profound uncertainties. As a central bank, our job is that of an anchor of stability and confidence, which would ensure that the economy achieves sustained high growth. Since the last policy, inflation has been on the upside, while there has been a moderation in growth. Accordingly, the MPC has adopted a prudent and cautious approach in this meeting to wait for better visibility on the growth and inflation outlook. At such a critical juncture, prudence, practicality and timing of decisions become even more critical. Our endeavour in the Reserve Bank has always been to implement timely and carefully calibrated measures to derive maximum impact. This will continue to be the guiding principle for all future actions also,” former RBI governor Shaktikanta Das had said in his last policy review.

Stock market today: BSE Sensex and Nifty50, the Indian equity benchmark indices, opened flat in trade on Friday ahead of the RBI monetary policy. While BSE Sensex was above 78,050, Nifty50 was near 23,600. At 9:16 AM, BSE Sensex was trading at 78,066.81, up 9 points or 0.011%. Nifty50 was at 23,611.15, up 8 points or 0.033%.

Bajaj Broking Research anticipates that the RBI will reduce the repo rate by 25 basis points, marking the first reduction in nearly five years. This follows a period where the domestic rate-setting panel maintained a steady policy repo rate across 11 consecutive meetings, after implementing a 250 bps increase between May 2022 and February 2023.

The research firm notes that the RBI's current liquidity initiatives are focused on maintaining financial system stability, which strengthens the outlook for monetary policy relaxation.

Additionally, Bajaj Broking Research indicates that despite the RBI's commitment to maintaining adequate liquidity, they do not foresee a reduction in CRR during the upcoming policy meeting.

RBI MPC Meeting 2025 LIVE: If RBI governor Sanjay Malhotra announces a repo rate cut of 25 basis points today after the MPC review meet, then loan borrowers can look forward to their EMIs coming down.

Former RBI governor Shaktikanta Das in his last monetary policy statement had said, “After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, it decided by a 4 to 2 majority to keep the policy repo rate unchanged at 6.50 per cent. Consequently, 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. The MPC also decided unanimously to continue with the ‘neutral’ stance and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth.”

Sanjay Malhotra, for the first time as RBI Governor, is presiding over the Monetary Policy Committee (MPC) meeting. The committee's verdict will be disclosed on Friday morning, with market analysts anticipating a 25 basis points cut in interest rates, the first such reduction since 2020. The last time the Reserve Bank of India (RBI) lowered the repo rate was in May 2020, when it was decreased by 40 basis points to 4 per cent, aiming to support the economy during the Covid pandemic crisis and ensuing lockdown.

The central bank initiated an increase in rates in May 2022, responding to the Russia-Ukraine conflict, and maintained this stance until May 2023, when it opted to pause. The current MPC deliberations, which commenced on Wednesday, are scheduled for three days.

BofA Global Research anticipates that the Reserve Bank of India will reduce the repo rate by 25 bps to 6.25 per cent during the February Monetary Policy Committee meeting, likely through a unanimous verdict. The organisation suggests this decision is warranted by current growth and inflation indicators. Additionally, they propose measures to introduce lasting liquidity, including a potential 50 bps reduction in CRR or significant open market operations for bond purchases.

According to Emkay Research's analysis, market participants seek policy interventions beyond traditional rate adjustments, as concerns about liquidity persist as an ongoing issue.

The RBI forecasts India's real GDP growth at 7.2 percent for FY 2024-25, whilst the Economic Survey projects 6.4 percent, corresponding with the National Statistical Office's assessment.

Considering these economic forecasts, the approach towards rate adjustments is expected to be prudent and measured, with subsequent reductions contingent upon inflation developments and broader economic conditions.

During the December policy meeting, the Monetary Policy Committee voted 5-1 to maintain current rates, emphasising stability whilst tracking inflation patterns. The committee also reduced the Cash Reserve Ratio by 50 bps to 4 per cent, aiming to enhance liquidity and boost credit growth.

Although analysts widely anticipate a 25 bps rate reduction, they suggest the RBI should implement supplementary liquidity measures to ensure sufficient cash circulation in the banking sector.

RBI MPC Meeting 2025 LIVE: The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) will deliver its first policy decision under newly appointed Governor Sanjay Malhotra on Friday.

Experts suggest the central bank could reduce the repo rate by 25 basis points (bps) to boost economic expansion whilst maintaining control over inflation.

A Bank of Baroda analysis indicates that inflation has moderated, largely attributed to reduced prices of key vegetables including tomatoes, onions, and potatoes. The enhanced supply conditions have led to decreased fluctuations in the Consumer Price Index (CPI), allowing the RBI flexibility for a calculated rate reduction.

The analysis mentions, "Balancing and counterbalancing all macro and geopolitical factors, we believe there remains space for a 25 bps rate cut by the RBI in the upcoming policy."
Currently, the repo rate is fixed at 6.50 per cent, remaining static throughout the previous eleven consecutive policy meetings.