♦ Reserve Bank of India (RBI) Governor Sanjay Malhotra confirmed that the Monetary Policy Committee (MPC) had unanimously decided to reduce the policy rate by 25 basis points (bps), from 6.50% to 6.25% on 7 February 2025.

♦ This was the first reduction since May 2020 and the first revision after two-and-a-half years. The move is expected to reduce borrowing costs, potentially improving credit availability and boosting demand across sectors.

RBI MPC Meeting February 2025 Key Highlights:

♦ GDP expected to grow at 6.7% in 2025-26, driven by consumption & investment.

♦ Inflation projected at 4.2% for 2025-26, barring major shocks.

♦ Global risks (geopolitics, trade policy, financial volatility) remain key concerns.

Other Adjustments: Standing Deposit Facility (SDF) rate: 6.00%

Marginal Standing Facility (MSF) rate & Bank Rate: 6.50%

India’s Economic Growth (2024-25):

GDP Growth Estimate: 6.4% YoY, driven by private consumption recovery; (Quarterly estimates: Q1 - 6.7%, Q2 - 7.0%, Q3 & Q4 - 6.5% each)

Headline Inflation: Declined from 6.2% in Oct 2024 to lower levels in Nov-Dec 2024 due to falling food inflation

Projections for 2024-25:

CPI Inflation: 4.8% (Q4: 4.4%);

Projections for 2025-26:

CPI Inflation: 4.2%