The Reserve Bank of India (RBI) has concluded its Monetary Policy Committee (MPC) meeting on February 7. The central bank in a major decision has reduced the benchmark repo rate by 25 basis points (bps) to 6.25% from 6.5%. MPC reached this decision unanimously. This is the first-rate cut in nearly 5 years, with the last reduction done in May 2020. After that, the central bank has raised interest rates seven times, reaching 6.50%. RBI has kept the benchmark rates has remained unchanged since February 2023. 

Furthermore, the MPC maintains the status quo, with the monetary policy stance remaining neutral. Additionally, RBI Governor Sanjay Malhotra announced the decision in the monetary policy statement released on Friday.

This meeting of the MPC was headed by the new RBI Governor, Sanjay Malhotra. It was scheduled from February 5 to 7. Notably, this was the first MPC meet under the new Governor Malhotra and also the first after the Union Budget 2025-2026 was presented on February 1.

Key Takeaways Of The RBI MPC Meeting

• MPC unanimously decided to reduce the policy repo rate by 25 bps to 6.25%.
• The standing deposit facility (SDF) rate has been revised to 6%.
• The marginal standing facility (MSF) rate and the Bank Rate has been revised to 6.50%.
• RBI has projected a real GDP growth rate of 6.7% for next fiscal year.
• RBI has projected a Consumer Price Index (CPI) inflation rate of 4.2% for next fiscal year.
• The meeting of the MPC was scheduled during February 5 to 7, 2025.

What RBI Governor Said?

RBI Governor Malhotra high-lightened the challenges surrounding the Indian economy. “Divergent trajectory of monetary policy across advanced economies lingering geopolitical tensions, and elevated trade and policy uncertainties have exacerbated financial market volatility. Such an uncertain global environment has posed uncertain policy trade-offs in emerging market economies,” he said.

Malhotra said, “RBI has been applying all tools at its disposal to face the multipronged challenges.”