Mumbai: The Reserve Bank of India (RBI), in its latest Monetary Policy Committee (MPC) meeting for FY2025-26, announced a 0.50 per cent cut in the repo rate, bringing it down to 5.5 per cent. Alongside this, key changes in CRR, inflation forecasts, and policy stance were also introduced to boost economic growth.
Repo Rate Cut
RBI reduced the repo rate by 0.50 per cent, bringing it down from 6.00 per cent to 5.50 per cent. This means loans may become cheaper for borrowers.
CRR Cut for Liquidity
RBI also reduced CRR (Cash Reserve Ratio) by 1 per cent, from 4 per cent to 3 per cent, to add more money into the banking system.
Policy Stance Changed
RBI has changed its monetary policy stance from ‘accommodative’ to ‘neutral’, meaning future rate changes will depend on data.
Inflation Under Control
Inflation has fallen below the target of 4 per cent. RBI now expects inflation in FY26 to be around 3.7 per cent.
CPI Forecast Revised
The Consumer Price Index (CPI) forecast for FY26 has been reduced from 4 per cent to 3.7 per cent.
Growth Push Through Rate Cut
RBI said the rate cut is aimed at boosting economic growth, especially when global markets remain uncertain.
GDP Forecast Unchanged
GDP growth for FY26 is expected to remain steady at 6.5 per cent.
Good Monsoon Expected
A normal monsoon is expected to help increase agricultural output.
India’s Economy Stays Strong
Despite global challenges, India's economy is strong and has good opportunities for both domestic and foreign investors.
Liquidity Through OMO
RBI will use Open Market Operations (OMO) to ensure surplus liquidity in the banking system.
MSF Rate Also Cut
The Marginal Standing Facility (MSF) rate was reduced from 6.25 per cent to 5.75 per cent. This is also a move to make borrowing easier for banks.
CRR Cut in 4 Steps
The CRR cut from 4 per cent to 3 per cent will happen in four stages:
0.25 per cent cut on 6 September
0.25 per cent cut on 4 October
0.25 per cent cut on 1 November
0.25 per cent cut on 29 November
This will release about Rs 2.5 lakh crore into the system, helping banks lend more.
GDP Forecast for FY26 (Unchanged)
Q1: 6.5 per cent
Q2: 6.7 per cent
Q3: 6.6 per cent
Q4: 6.3 per cent
CPI (Inflation) Forecast for FY26
Quarter Earlier Now
Q1 3.6 per cent 2.9 per cent
Q2 3.9 per cent 3.4 per cent
Q3 3.8 per cent 3.9 per cent
Q4 4.4 per cent 4.4 per cent
