RBI changes stance from accommodative to neutral

The Reserve Bank of India MPC voted to reduce the policy repo rate by a larger than expected 50 basis points (bps) to 5.50 per cent with immediate effect, after assessing the current and evolving macroeconomic situation. Further, the central bank also reduced CRR rate by 100 bps although in four tranches starting from September. Thus, amid sustained soft inflation well below the target and with signs of a broad-based moderation, RBI said it is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum. This changed growth-inflation dynamics calls for not only continuing with the policy easing but also frontloading the rate cuts to support growth, RBI said.

However, after having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth. Hence, the MPC also decided to change the stance from accommodative to neutral. From here onwards, the MPC will be carefully assessing the incoming data and the evolving outlook to chart out the future course of monetary policy in order to strike the right growth-inflation balance. The fast-changing global economic situation too necessitates continuous monitoring and assessment of the evolving macroeconomic outlook, the central bank noted.

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