RBI slashes rate, shifts stance

Eases repo rate by 25 bps to 6%; dials down growth, inflation projections

- MANOJIT SAHA

The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Wednesday unanimously lowered the policy repo rate by 25 basis points to 6 per cent, marking a second consecutive cut. It also changed its policy stance to "accommodative", signaling the likelihood of further easing in the coming months.

The central bank lowered its gross domestic product (GDP) growth forecast for 2025-26 (FY26) to 6.5 per cent from the 6.7 per cent projected in February. The inflation forecast for the financial year was also revised downwards to 4 per cent from 4.2 per cent earlier.

A "decisive improvement" in the inflation outlook — projected to fall below the RBI's target of 4 per cent during 2025 — helped the central bank pivot towards supporting growth.

Global uncertainties, particularly those driven by ongoing tariff conflicts, are expected to weigh on domestic growth, said RBI Governor Sanjay Malhotra, although he noted India's exposure to such risks would be limited.

"According to projections, there is now a greater confidence of a durable alignment of headline inflation with the target of 4 per cent over a 12-month horizon," he said while announcing the review of the first monetary policy of FY26.