Key Highlights
- RBI Governor Sanjay Malhotra announces key interest rate decision amid India's falling inflation rates.
- Monetary policy focuses on balancing growth support and inflation control in the 2025 economic outlook.
The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, is scheduled to announce the policy repo rate today at 10 a.m. in Mumbai, as the three-day Monetary Policy Committee (MPC) meeting concludes.
As the country’s rate of inflation drops, the policy meeting is taking place. India’s retail inflation rate was 3.16 percent in April which was a decrease from 3.34 percent in March, according to the Ministry of Statistics and Programme Implementation.
Rates of inflation are close to the Reserve Bank’s goal of 4% which means there is a chance that the central bank will lower interest rates.
On April 7, 8 and 9, the RBI brought down the repo rate by 25 basis points which reduced it from 6.25 percent to 6 percent.
During his announcement, Governor Malhotra said that after studying the evolving economic and financial scenarios and outlook, all members of the MPC decided unanimously to lower the policy repo rate by 25 basis points to 6 percent from the previous day.
For the second consecutive time, the RBI has cut its interest rates. During February, the central bank reduced the repo rate by 25 basis points, bringing it down to 6.25 percent which reflects a move towards being more accommodative.
Also Read: Why RBI's MPC Could Opt for a Third Straight Repo Rate Reduction?
Analysts are monitoring to find out if the RBI plans to cut interest rates as inflation keeps falling.
UBI notes in a recent report that the Consumer Price Index (CPI) is predicted to go even lower to 3.0% in May, its lowest level in six years.
Cereals and pulses are the main reason for the dropping prices, but prices in most segments have already started to climb.
With inflation easing and two consecutive rate cuts already implemented, economists and market participants are waiting to see if the RBI will take a more aggressive stance this time to support economic expansion.
