RBI Monetary Policy, In Detail

The Reserve Bank of India (RBI) Monetary Policy is a crucial framework that governs interest rates, inflation control, and overall economic stability in India. Here's a detailed breakdown of the latest policy updates:

Key Highlights of the April 2025 RBI Monetary Policy

1. Repo Rate Cut: The RBI reduced the repo rate by 25 basis points, bringing it down to 6% from the previous 6.25%. This marks the second consecutive rate cut in 2025, aimed at stimulating economic growth amid global uncertainties.
2. Monetary Policy Stance: The stance has shifted to "accommodative", signaling that further rate cuts could be possible if inflation remains under control.
3. Inflation Outlook: The RBI lowered its inflation projection for FY26 to 4%, down from the previous estimate of 4.2%. This suggests a more stable price environment, driven by lower oil prices and improved food supply.
4. GDP Growth Forecast: The central bank trimmed its GDP growth estimate for FY26 to 6.5%, citing global trade uncertainties and the impact of new tariffs.
5. Liquidity Measures: The RBI has injected ₹7 lakh crore into the banking system through various liquidity measures, including bond purchases and forex swaps, to ensure smooth credit flow.
6. Impact on Borrowers: With the repo rate cut, home loan and business loan interest rates are expected to decline, making borrowing cheaper.
7. Banking & Fintech Reforms: New measures include expanded co-lending rules, securitization of stressed assets, and revised gold loan regulations.

Why This Policy Matters

• Boosts Economic Growth: Lower interest rates encourage borrowing and investment.
• Controls Inflation: The RBI aims to keep inflation within its target range of 4% ± 2%.
• Manages Global Risks: The policy helps India navigate external challenges like US tariffs and global financial volatility