RBI Issues April 2025 Policy Update
The Monetary Policy Committee (MPC), in its 54th meeting and the first of the financial year 2025–26, unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6 per cent with immediate effect. The repo rate is the rate at which the Reserve Bank of India lends money to commercial banks, and a cut in this rate is aimed at boosting lending and investment. This decision comes at a time when global economic conditions are becoming increasingly uncertain.
Key Policy Decisions
The Monetary Policy Committee unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6 per cent with immediate effect. As a result, the Standing Deposit Facility rate under the Liquidity Adjustment Facility has been adjusted to 5.75 per cent. The SDF allows banks to park excess funds with the RBI without any collateral. The Marginal Standing Facility (MSF) rate and the Bank Rate have both been revised to 6.25 per cent.
Growth Assessment
The Reserve Bank of India has projected real GDP growth at 6.5 per cent for 2025–26, maintaining the same rate as estimated for 2024–25, following a strong expansion of 9.2 per cent in the preceding year.
The Monetary Policy Report of April 2025 reflects a balanced approach by the Reserve Bank of India (RBI) to support growth while maintaining price stability. The decision to cut the policy repo rate by 25 basis points to 6 per cent is underpinned by easing inflation, particularly in food prices, and a gradual recovery in economic activity. With GDP growth for 2025–26 projected at 6.5 per cent and inflation expected to remain within the 4 per cent target band, the report signals cautious optimism despite global uncertainties.
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