RBI reduces repo rate by 25bps, maintains 'neutral' stance; check key highlights

The Reserve Bank of India (RBI) on Friday, February 7, cut its key lending rate by 25 basis points (bps) to 6.25% from 6.5% for the first time in five years.

This was the first monetary policy for the newly appointed RBI Governor Sanjay Malhotra. In his address, the governor said that the six-member Monetary Policy Committee (MPC) unanimously decided to cut the repo rate.

• The Monetary Policy Committee (MPC) decided unanimously to reduce the policy rate by 25 basis points, keeping its stance ‘neutral’.

• Inflation targeting has served the Indian economy very well, says RBI Governor Sanjay Malhotra.

• Average inflation has remained lower since the introduction of the monetary policy framework.

• The standing deposit facility (SDF) rate was adjusted to 6% and the marginal standing facility (MSF) rate to 6.50%.

• We will continue to strengthen, rationalise and refine the prudential framework, says RBI Governor Malhotra.

• The Indian economy remains strong, though not immune to global challenges. RBI forex policy has remained consistent, favouring orderly and stable market operation and not targeting any exchange rate.

• The central bank estimates gross domestic product (GDP) growth in the next fiscal year at about 6.7%.

• RBI projects inflation for FY'25 at 4.8%, FY'26 projection at 4.2%.

-Assuming a normal monsoon next year, CPI inflation for 2025-26 is projected at 4.2% with Q1 at 4.5%; Q2 at 4%; Q3 at 3.8%; and Q4 at 4.2%.

• RBI forex policy has remained consistent, in favour of orderly and stable market operation, and does not target any exchange rate.

• Malhotra also urged banks not to passively park funds with the central bank but actively trade amongst themselves.

• Surge in digital fraud is a matter of concern, it warrants action by all stakeholders, says RBI Governor.

• Banks to have 'bank.in' internet domain name, non-banks 'fin.in.

• CAD expected to remain well within sustainable level.

• Excessive volatility in global financial markets and continued uncertainties about global trade policies coupled with adverse weather events pose risks to the growth and inflation outlook, the central bank said. This calls for the MPC to remain watchful.

• India can certainly achieve over 7% growth rate, we should aspire for that, says RBI Governor Malhotra.

• At present we are focussing on growth because inflation is down and will continue to go down, says RBI Governor addressing media.

• We are always watchful, will be nimble and very proactive in providing liquidity, says RBI Governor Sanjay Malhotra.