Mumbai: The Reserve Bank of India (RBI) today unveiled its second bi-monthly monetary policy for FY26, delivering a significant and unexpected cut to the repo rate. Following a three-day meeting of the Monetary Policy Committee (MPC) led by Governor Sanjay Malhotra, the central bank announced a 50 basis point reduction, bringing the repo rate down to 5.50% from 6.00%. This move surpasses market expectations and marks the RBI’s third consecutive repo rate cut.
The decision comes at a crucial time when India’s retail inflation remains within the RBI’s comfort zone of 2%-4%, yet the economy is seeking a boost to accelerate growth. In a further push to stimulate the economy, the MPC also decided to shift its policy stance from ‘Accommodative’ to ‘Neutral’. Additionally, the Cash Reserve Ratio (CRR) was lowered by a substantial 100 basis points, moving from 4% to 3%.
CPI declines to 3.7 percent: As per the RBI Governor’s announcement, the MPC estimated CPI inflation for 2025-26 to be at 3.7 percent, lower than the 4 percent estimated earlier. The real GDP growth for 2025-26 is projected at 6.5 per cent. For the financial year 2024-25, the growth rate stood at 6.5 per cent, which was a four-year low.
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