प्रेस प्रकाशनी PRESS RELEASE

भारतीय ररज़र्व बैंक

RESERVE BANK OF INDIA

वेबसाइट : www.rbi.org.in/hindi संचार वर्भाग, केंद्रीय कायाा लय, शहीद भगत ससिंह मागा , फोटा , मिंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : [email protected] Mumbai - 400 001 फोन/Phone: 022 - 2266 0502

April 09, 2025

Monetary Policy Statement, 2025-26

Resolution of the Monetary Policy Committee
April 7 to 9, 2025

Monetary Policy Decisions

The Monetary Policy Committee (MPC) held its 54th meeting from April 7 to 9, 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.

2. After assessing the current and evolving macroeconomic situation, the MPC
unanimously voted to reduce the policy repo rate by 25 basis points to 6.00 per cent
with immediate effect. Consequently, the standing deposit facility (SDF) rate under the
liquidity adjustment facility (LAF) shall stand adjusted to 5.75 per cent and the marginal
standing facility (MSF) rate and the Bank Rate to 6.25 per cent. This decision is in
consonance with the objective of achieving the medium-term target for consumer price
index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting
growth.

Growth and Inflation Outlook

3. 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. Financial markets have
responded through sharp fall in dollar index and equity sell-offs with significant
softening in bond yields and crude oil prices.

4. The National Statistics Office (NSO) has estimated real Gross Domestic
Product (GDP) growth at 6.5 per cent for 2024-25, on top of 9.2 per cent in 2023-24.
Going forward, sustained demand from rural areas, an anticipated revival in urban
consumption, expected recovery of fixed capital formation supported by increased
government capital expenditure, higher capacity utilisation, and healthy balance
sheets of corporates and banks are expected to support growth. Merchandise exports
would be weighed down by the evolving global economic landscape which appears to
be uncertain at the current juncture, while services exports are expected to sustain the
resilience. On the supply side, while agricultural prospects appear bright, industrial
activity continues to recover, and services sector is expected to be resilient.

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Headwinds from global trade disruptions continue to pose downward risks. Taking all
these factors into consideration, real GDP growth for 2025-26 is now projected at 6.5
per cent, with Q1 at 6.5 per cent; Q2 at 6.7 per cent; Q3 at 6.6 per cent; and Q4 at 6.3
per cent. (Chart 1). The risks are evenly balanced.

5. CPI headline inflation declined by a cumulative 1.6 percentage points during

January-February 2025, from 5.2 per cent in December 2024 to a low of 3.6 per cent
in February 2025. On the back of a strong seasonal correction in vegetable prices this
year, food inflation dropped to a 21-month low of 3.8 per cent in February. Fuel group
continued to remain in deflation. Core inflation, after remaining steady in December
2024-January 2025, inched up to 4.1 per cent in February 2025, driven primarily by a
sharp pick-up in gold prices.

6. The outlook for food inflation has turned decisively positive. There has been a
substantial and broad-based seasonal correction in vegetable prices. The
uncertainties on rabi crops have abated considerably and the second advance
estimates point to a record wheat production and higher production of key pulses over
last year. Along with robust kharif arrivals, this is expected to set the stage for a durable
softening in food inflation. Sharp decline in inflation expectations for three months and
one year ahead period would help anchor inflation expectations going ahead.
Furthermore, the fall in crude oil prices augurs well for the inflation outlook. Concerns
on lingering global market uncertainties and recurrence of adverse weather-related
supply disruptions pose upside risks to the inflation trajectory. Taking all these factors
into consideration, and assuming a normal monsoon, CPI inflation for the financial
year 2025-26 is projected at 4.0 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per cent;
Q3 at 3.8 per cent; and Q4 at 4.4 per cent. The risks are evenly balanced.

Rationale for Monetary Policy Decisions

7. The MPC noted that inflation is currently below the target, 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 the target of 4 per cent over a 12-month horizon. On the other

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hand, impeded by a challenging global environment, growth is still on a recovery path
after an underwhelming performance in the first half of 2024-25. While the risks are
evenly balanced around the baseline projections of growth, uncertainties remain high
in the wake of the recent spurt in global volatility. In such challenging global economic
conditions, the benign inflation and moderate growth outlook demands that the MPC
continues to support growth. Accordingly, the MPC unanimously voted to reduce the
policy repo rate by 25 basis points to 6.00 per cent. Moreover, it also decided to
change the stance from neutral to accommodative. However, it noted that the rapidly
evolving situation requires continuous monitoring and assessment of the economic
outlook.

8. The minutes of the MPC’s meeting will be published on April 23, 2025.

9. The next meeting of the MPC is scheduled from June 4 to 6, 2025.

(Puneet Pancholy)
Press Release: 2025-2026/61 Chief General Manager