Following are the highlights of the statement made by Reserve Bank of India Governor Sanjay Malhotra on Wednesday after the first bi-monthly meeting of the Monetary Policy Committee for 2025-26 (Apr-Mar):
KEY TAKEAWAYS
- MPC voted unanimously to cut repo rate by 25 bps
- MPC voted unanimously to cut repo rate by 25 bps to 6.00%
- SDF rate adjusted to 5.75%
- MPC changed stance to accommodative
- Policy stance has been the subject of plenty of commentary
- Our stance signals intended policy direction
- Policy stance should not be linked with liquidity conditions
- Stance means MPC only considering the status quo or rate cut
- Stance change to not be associated with liquidity conditions
- Minutes of the April MPC meeting to be released on Apr 23
INFLATION
- Apr-Jun CPI inflation seen at 3.6% vs 4.5% earlier
- Jul-Sep CPI inflation seen at 3.9% vs 4.0% earlier
- Oct-Dec CPI inflation seen unchanged at 3.8%
- Jan-Mar CPI inflation seen at 4.4% vs 4.2% earlier
- Greater confidence about the durable alignment of inflation with the target
- More confidence in the durable alignment of headline CPI with 4%
- Sharper-than-expected food inflation fall gives us comfort
- Outlook on food inflation has turned decisively positive
- Risks to inflation are two-sided
- Tariff uncertainty may lead to pressure on the rupee, imported inflation
- Upside risks to CPI include currency depreciation
- Upside risks to CPI include imported inflation
- Don’t see high concern for India inflation from tariffs
- Crop estimates suggest a durable decline in food inflation
- Falling crude prices augur well for inflation
- Cuts FY26 CPI inflation forecast to 4.0% from 4.2% earlier
- Risks to inflation forecasts are evenly balanced
GROWTH
- Cuts FY26 GDP growth forecast to 6.5% from 6.7%
- Cuts Apr-Jun GDP growth forecast to 6.5% from 6.7%
- Cuts Jul-Sept GDP growth forecast to 6.7% from 7.0% earlier
- Hikes Oct-Dec GDP growth forecast to 6.6% from 6.5% earlier
- Cuts Jan-Mar 2026 GDP growth forecast to 6.3% from 6.5% earlier
- MPC continues to support growth
- Risks to growth forecasts are evenly balanced
- Uncertainties around growth projections remain high
- Growth is recovering, lower than what we aspire for
- Quantification of adverse impact on growth is difficult
MACROECONOMY
- FY26 has begun on an anxious note
- Some trade frictions are coming true, unsettling the globe
- The global economic outlook is fast changing
- Recent trade tariff measures have exacerbated uncertainties
- Recent trade tariff measures are a headwind for the global economy
- Aiming for non-inflationary growth
- The domestic inflation-growth path demands monetary policy support for growth
- Will remain agile and decisive in our policy response
- Monetary policy can play an anchoring role to ensure a stable economy
- Central banks are navigating cautiously in these circumstances
- The evolving situation needs monitoring of the economic outlook
- The situation requires continuous monitoring and assessment
- Indian economy made steady progress on price stability, growth
- Uncertainty itself dampens growth by affecting investment decisions
- Higher tariffs will hurt net exports
- Global growth, dented by trade frictions, will impede local growth
- India is very proactively engaging with the US on trade agreements
- Services sector activity resilient
- Prospect of the agri sector remains bright
- Manufacturing showing signs of a revival
- Bright prospects on agriculture are positive for rural demand
- Urban consumption is gradually picking up
- Services exports to remain resilient
- Merchandise exports to be weighed down by global uncertainties
- Investment activity expected to pick up
- The global economy is going through a period of exceptional uncertainty
- Difficulty in extracting the signal poses a policymaking challenge
FINANCIAL MARKETS
- CAD for FY25, FY26 to remain within sustainable levels
- Svcs exports remain resilient
- Remittances, services trade expected to remain in large surplus
- ECB witnessed higher net inflows vs last year
- India’s external sector remains resilient
- India FX reserves show import cover of around 11 mos
- Weighted avg call rate softened, near call since Feb policy
- Committed to providing sufficient liquidity
- Will proactively take measures to ensure adequate liquidity
- Banking system fundamentals continue to be robust
- Liquidity buffer in banking system well above regulatory threshold
- Systemic level parameters for NBFCs are also very sound
- Profitability indicators of banks remain healthy
- Propose to enable securitisation of stressed assets via the market system
- Securitisation of stressed assets via the market in addition to the ARC route
- Co-lending norms to extend to all regulated entities, loans
- To issue comprehensive guidelines on loans against gold
- To issue comprehensive guidelines for non-fund-based entities
- To issue comprehensive norms for partial credit enhancement
- NPCI can now decide UPI transaction limits in consultation with banks
- Regulatory sandbox to be theme-neutral, on-tap
- No change in person-to-person UPI transaction limit
Projected CPI inflation
CPI New Previous
FY26 4.00% 4.20%
Q1 3.60% 4.50%
Q2 3.90% 4.00%
Q3 3.80% 3.80%
Q4 4.40% 4.20%
Projected GDP growth
GDP New Previous
FY25 6.50% 6.40%
FY26 6.50% 6.70%
Q1 6.50% 6.70%
Q2 6.70% 7.00%
Q3 6.60% 6.50%
Q4 6.30% 6.50%
