RBI announcements in pics: Rate cuts, GDP growth, inflation and more

Newly appointed RBI governor Sanjay Malhotra unveiled the final bi-monthly monetary policy of this fiscal year, outlining key economic and policy measures.The Monetary Policy Committee (MPC) held its 53rd meeting from February 5 to 7, 2025, under the chairmanship of governor Malhotra for the first time. Here are some of the key decisions of the committee.

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The MPC has unanimously decided to reduce the policy rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25 per cent. This is the first adjustment in the repo rate after remaining unchanged at 6.50 per cent since 2020 over past 11 meetings. The rate cut is expected to bring some relief to borrowers, as it could lead to lower EMIs on home, auto, and other loans amid ongoing economic uncertainties.
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The MPC also decided to maintain a neutral monetary policy stance, ensuring flexibility to respond to ongoing macroeconomic conditions. The committee remains firmly focused on achieving a sustained alignment of inflation with the target while supporting economic growth.
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The central bank estimated GDP growth for 2025-2026 at 6.7 per cent. Quarterly projections are: 6.7 per cent for Q1, 7 per cent for Q2, 6.5 per cent for Q3 and Q4. For FY25, GDP growth is estimated at 6.4 per cent for the fiscal year ending in March.
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Food inflation pressures are expected to ease, provided there are no supply-side shocks. This softening will be driven by strong kharif production, a seasonal decline in vegetable prices during winter, and favourable rabi crop prospects. Additionally, a healthy rabi harvest and a projected recovery in industrial activity are likely to support economic growth in 2025-26.
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To strengthen cybersecurity, the Reserve Bank announced that Indian banks will have the exclusive internet domain name ‘bank.in,’ while non-bank financial entities will use ‘fin.in.’ The RBI also plans to strengthen its economic forecasting capabilities using Artificial Intelligence (AI) and will continue its flexible inflation targeting framework to maintain macroeconomic stability.
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The central bank anticipated the Consumer Price Index (CPI) inflation to decline to 4.8 per cent in FY25, with Q4 FY25 inflation estimated at 4.4 per cent. Looking ahead to FY26, inflation is projected to remain at 4.2 per cent, with quarterly forecasts as follows: Q1 FY26 at 4.5 per cent, Q2 at 4.0 per cent, Q3 at 3.8 per cent, and Q4 at 4.2 per cent.
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India's foreign exchange reserves remain strong, exceeding USD 630 billion as of January 31, 2025. This provides an import cover of over 10 months, ensuring robust external stability.