RBI projects India’s GDP growth at 6.7% and inflation at 4.2% for FY2025-26

RBI Projects India’s GDP Growth at 6.7% and Inflation at 4.2% for FY2025-26 After Repo Rate Cut

In the latest monetary policy committee (MPC) meeting of 2025, the Reserve Bank of India (RBI) has projected the country’s GDP growth to be at 6.7% and inflation at 4.2% for the fiscal year 2025-26. This comes as part of a broader strategy to stimulate economic growth amid global uncertainties.

Repo Rate Cut

The RBI announced a cut in the repo rate by 25 basis points, bringing it down to 6.25%. This decision was revealed by RBI Governor Sanjay Malhotra, who highlighted the central bank’s commitment to a ‘neutral’ monetary policy stance. The reduction in the repo rate is likely to lead to a decrease in loan equated monthly installments (EMIs), providing relief to borrowers and potentially boosting consumer spending.

Economic Projections

The projected GDP growth rate of 6.7% is expected to reflect in various sectors of the economy, fostering a positive environment for business growth and investment. The inflation rate, maintained at 4.2%, aligns with RBI’s medium-term targets, aiming to ensure price stability while supporting economic growth.

Context and Implications

This policy update follows recent trends where economists have adjusted their growth forecasts, taking into consideration the global economic scenario and domestic factors. The RBI’s decision to lower the repo rate is seen as a response to trim growth forecasts and bring the rate cuts back into focus.

The monetary policy update is crucial for market observers and stakeholders, offering insights into the RBI’s economic strategy. The repo rate cut and the growth projections are anticipated to impact various sectors, including banking, housing, and retail, as lower borrowing costs may encourage higher spending and investment.

As the nation moves towards FY2025-26, these developments by the RBI signify a balanced approach to fostering economic growth while managing inflationary pressures. Market participants and economists will closely watch the impact of these measures as India navigates the complexities of a changing global economic landscape.

For more information on the RBI’s monetary policy and its implications, you can refer to the detailed discussion from various news outlets covering the RBI MPC meeting.