RBI MPC Meeting 2025 LIVE: Repo Rate Reduction of 25bps to 6.25%;
As Informed by Sanjay Malhotra, Reserve Bank Of India Governor Sanjay Malhotra; Increased GDP Growth Prediction 6.7%
Calling it the most waited announcement of the week, The Reserve Bank of India announced in the recent MPC meeting that the policy repo rate will be reduced by 25 basis points to 6.25%. The abatement decision was taken in the later part of the first MPC meeting of 2025 for Sanjay’s “MPC Meeting First Era.” With decreasing inflation and constant growth concerns, this move from RBI aims to ease monetary policy to boost economic activity and ensure price stability.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
During the address of his first policy statement, Governor Malhotra moved a step ahead of his predecessor by declaring, “the sudden change was made with one purpose in mind,” this intention being controlled price movement. In tandem with the policy repo rate adjustment, the Sanjay Malhotra appointed Reserve Bank Of India MPC also increased the yearly estimate for FY22 GDP growth from 6.3% to 6.7% which indicates a shift in the odds for some future outcomes along the lines of Bunny Central.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
Repo Rate Cut and Its Implications
It is essential for the Reserve Bank of India to take note of the actions taken by the company and understand the rationale behind the cut undertaken in the repo rate by 25 basis points. The repo rate, which stands at 6.25, is the point at which commercial banks take loans from the Reserve Bank Of India (RBI).
Lowering the repo rate is now at six point two five not only enables borrowing for individuals and companies but also results in a decrease of the overall interest incurred on loans acquired as well as funds deposited in savings accounts. With the repo rate sitting at 6.25%, it is highly anticipated that an individual’s spending is considerably cheaper.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
The modification indicates a reversal of the cycle of reduction in the rate of interest lending that Reserve Bank of India seemed to follow in an effort to increase the capital expenses incurred by banks. Nonetheless, lowering of interest rates is still measured and completely controlled as a way to combat rampant inflation that can potentially become uncontrollable.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
So why the cut now? Cut by how much?
Negotiate it, as much as you want. It is not that one bold headline is going to answer all these questions. What led to a decision as risky and audacious as this stems deep on geo-economics at play globally. You had geopolitical tussles alongside financial market volatility rang the warning bells. While India has pulled through the worst withstanding these global headwinds, it is far from being immune to the slowing economic tide.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
As the pace of inflation recently fell below 6%, arriving to an acceptable range of 5.48%, the MPC were pleased to also adjust policy rates gradually. This certainly was a welcome decision to that committee.
Indias domestic economy expanded only at a rate of 5.4% in the previously accomplished quarter which is the lowest in two years. Allocating a glance {on} the sluggishness and the inflation grade moderation unquestionably shifts range stating a case in support of propelling inflation targeting strategies. It’s clear an economic stimulus is needed to greatly improve GDP growth rate, investment, and direct Government expenditure along boosting consumer spending.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
The impact on home loans and overall consumer spending is also crucial: For those lending, especially to account holders on floating-rate securities, this one might change few monthly expenses significantly. As it stands outside California, home loans alongside personal loans pegged to the repo rate will lead to paying lower Equated Monthly Instalments (EMIs). With the dropping of several loan repayments, many borrowers and consumers will have steered towards spending chasing the increased growth level of the economy.
When it comes to fixed deposits, a lower repo rate might translate to lower returns for such investors. An alternative valorous approach could be investing more in equity markets where more value can be taken off instead. This approach could help neutralize the weaker returns from the fixed income segment.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
Inflation Forecast
Inflation is one of the serious concerns for most central banks and the RBI has not been any different in the last few years. Most analysts suggest that the recent data inflation easing is due to various reasons including a decline in food prices. The RBI itself is expecting that the headline inflation index will continue to be controlled around the 4-5% range over the short term. It is suggested that relaxing inflationary expectations will ease the ability to cut policy rates in the coming months. Though, this will be dependent on whether inflation is effectively controlled in the next few quarters.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
Growth Projections
The RBI is now intending to implement a cut on the repo rate which would align well with its upward adjustment of the growth rate projection for the year. Further, the central bank has changed its growth projection to 6.7% for FY2025, which suggests that there is some recovery from the slowdown experienced during the previous year. Externally, it is assumed that high inflation is managed, along with external booming economic factors not worsening too much. Ensuring these conditions sets the projection to a reasonable assumption.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
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Monetary Policy Strategy Going Forward
Going forward, it is anticipated that the RBI will proceed with caution and neutrality. With the rate of control set to neutral, it is expected that the central bank will continue to make changes as per the inflation levels and any economic recovery. Although the RBI intends on implementing further cuts, it will do so later down the road should the economic performance remain quiet.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
Conclusion
RBI’s cut of 0.25% in company repo rates in response to India’s economic challenges seems to be a reasonable decision. With easing inflation, and an anticipated increase in GDP, this shift will be helpful in stimulating economic growth. The new RBI Governor has assumed charge at a very critical juncture, and his Sanjay Malhotra’s stewardship will be pivotal for India in the next few months of economic turmoil.
As the economy responds to the changes in policies, both borrowers and investors will be eager to see what unfolds next particularly the speed with which rates are cut and their consequences on inflation and growth.”RBI MPC Meeting 2025: Repo Rate Slashed to 6.25%, GDP Growth Forecast Revised to 6.7% – What’s Next?”
FAQs:
What is the current repo rate after the RBI MPC meeting in February 2025?
The repo rate stands lowered at 6.25% after the most recent meeting.
How does a repo rate cut affect home loan interest rates?
With reduction in the repo rate, interest rate on home loans also decreases, resulting in reduced borrowing costs to consumers.
Why did the RBI cut the repo rate now?
The repo rate was lowered in light of the inflation rate coming down and all the growth expectations to further stimulate economic activities.
What will happen to inflation with the rate cut?
For the RBI, the projection shows inflation contained with a target range of 4-5% due to dropping food prices and reasonable demand sustaining.
What is the RBI’s growth predication for FY2025?
The Reserve Bank of India has set a target GDP growth rate of 6.7% for FY2025.
Going forward, will the RBI pursue rate cuts?
Yes, there is more room for cuts depending on the outlook for inflation and the level of economic growth.