In April 2025, the Reserve Bank of India (RBI) cut the repo rate to 6% and projected a GDP growth of 6.5% for FY 2025-26 . This decision was made during Governor Sanjay Malhotra’s monetary policy review .
key features of the current RBI money policy :
The Reserve Bank of India’s (RBI) current monetary policy focuses on maintaining price stability while supporting economic growth. Here are the key features:
- Repo Rate: The repo rate, the interest rate at which the RBI lends to commercial banks, currently stands at 6% . This rate is a crucial tool for managing inflation and liquidity in the banking system.
- Inflation Target: The RBI aims to keep inflation at 4% with a tolerance band of +/- 2% . This target ensures that inflation remains within a manageable range, protecting the purchasing power of consumers and businesses.
- GDP Growth Projection: The RBI projects a GDP growth rate of 6.5% for fiscal year 2025-26 . This projection reflects the central bank’s outlook on economic recovery and growth momentum.
- Monetary Policy Stance: The current stance is focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth . This stance indicates the RBI’s cautious approach to managing liquidity and inflation pressures.
- Liquidity Management: The RBI actively manages liquidity in the banking system through various instruments, including reverse repo operations and open market operations (OMOs) . These measures ensure that there is adequate liquidity to support economic activity without fueling inflationary pressures.
In summary, the RBI’s current monetary policy is characterized by a focus on achieving its inflation target while supporting economic growth through calibrated policy measures and liquidity management…
