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The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) on Wednesday announced a 25-basis-point (bps) cut in the repo rate, reducing it from 6.25 per cent to 6 per cent, to support economic growth amid growing global uncertainties.
Announcing the decision after the MPC's three-day meeting held on April 7, 8, and 9, RBI Governor Sanjay Malhotra stated, "After a detailed assessment of the evolving macroeconomic and financial conditions and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 6 per cent with immediate effect." This marks the second consecutive rate cut in recent months. On February 7, the central bank had reduced the repo rate from 6.5 per cent to 6.25 per cent. Governor Malhotra highlighted the global economic turbulence that influenced the committee's decision. "To deliberate and decide on the policy reparations, 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. Amidst this turbulence, the US dollar has weakened appreciably," he stated. Malhotra also emphasized that domestic growth is showing signs of recovery after a sluggish first half of the last financial year, 2024-25, but remains below desired levels. "Growth is improving after a weak performance in the first half of the last financial year, 2024-2025, although it still remains lower than what we aspire for," he said. He added, "Consequently, the Standing Deposit Facility, the STF rate, under the Liquidity Adjustment Facility shall stand adjusted to 5.75 per cent, and the Marginal Standing Facility rate, or the MSF rate, and the Bank rate shall stand adjusted to 6.25 per cent." The MPC also adjusted key rates under the Liquidity Adjustment Facility (LAF). The Standing Deposit Facility (SDF) rate now stands at 5.75 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate have been revised to 6.25 per cent. On inflation, the Governor painted an optimistic picture and said, "The Monetary Policy Committee noted that the inflation is currently below the target. It is supported by a sharp fall in food inflation. Moreover, there is a decisive improvement in the inflation outlook. As per projections, there is now a greater confidence of a durable alignment of headline inflation with a target of 4 per cent over a 12-month horizon." (ANI)
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