RBI cuts repo rate further by 25 bps to 6%; a look at key policy rates

The Reserve Bank of India (RBI)’s monetary policy committee (MPC) announced a 25-basis-point cut in the repo rate from 6.25 per cent to 6 per cent. This is Governor Sanjay Malhotra’s second MPC meet, where he announced the policy decision on Wednesday.

 

The benchmark repo rate was kept unchanged at 6.5 per cent for 11 consecutive MPC meetings and the first rate cut was announced in February 2025, its first cut in nearly five years. The retail inflation remained moderate at 3.61 per cent in February.

 

In May 2020, the central bank reduced the repo rates by 40 basis points to four per cent.

 

 

RBI MPC: Key changes in rates

Repo rate: The repo rate was brought down further by 25 basis points from 6.25 per cent to 6 per cent.

 

Standing Deposit Facility 

The current standing deposit facility (SDF) rate is 5.75 per cent, whereas it was changed to 6 per cent in the February 2025 MPC meeting.   

The marginal standing facility (MSF) rate is at 6.25 per cent as compared to 6.5 per cent in the previous MPC meeting.

 

CPI forecast 

The central bank has revised the Consumer Price Index (CPI) forecast to 4 per cent from 4.2 per cent.

Q1FY26 at 3.6 per cent

Q2FY26 at 3.9 per cent

Q3FY26 at 3.8 per cent

Q4FY26 at 4.4 per cent

 

GDP forecast 

Central bank reduces gross domestic product (GDP) growth projections for FY26 to 6.5 per cent from 6.7 per cent. Here are quarterly projections: 

Q1FY26 at 6.5 per cent

Q2FY26 at 6.7 per cent

Q3FY26 at 6.6 per cent

Q4FY26 at 6.3 per cent

 

RBI’s accommodative stance 

The Governor Sanjay Malhotra-led panel opted for an accommodative stance from its ‘neutral’ stance in February. Under the accommodative stance, the central bank will focus on strengthening economic growth by bringing down interest rates. Whereas, the neutral stance allows the central bank to either increase or reduce the rates depending on inflation and growth trends.