50 BPS Repo Rate Cut Hints at Pause to Easing Cycle

The MPC cut its annual average CPI inflation for FY26 to 3.7% from 4% earlier

- ADITI NAYAR

In an action-packed policy, the Reserve Bank of India's (RBI) monetary policy committee (MPC) unexpectedly delivered a number of surprises. These included a larger-than-expected immediate repo rate cut and a phased cash reserve ratio (CRR) reduction, by 50 basis points (bps) and 100 bps, respectively. Simultaneously, the stance was shifted back to neutral from accommodative, thereby suggesting a possible end to the rate-easing cycle, after a rapid 100 bps reduction over three consecutive policy meetings. These measures were facilitated by the committee's views on the growth-inflation dynamics, as well as the desire to induce some certainty around monetary policy actions, in an otherwise turbulent global economic environment.