On 7 February 2025, the Reserve Bank of India (RBI) reduced the policy repo rate by 25 basis points, from 6.50% to 6.25%, marking the first rate cut in nearly five years. RBI Governor Sanjay Malhotra made the announcement after a three-day Monetary Policy Committee (MPC) meeting in Mumbai. As a result:
- Standing Deposit Facility (SDF) rate is now 6.00%
- Marginal Standing Facility (MSF) rate and Bank Rate remain at 6.50%
- The MPC has maintained a ‘neutral’ stance, focusing on controlling inflation while supporting growth
The last rate cut was in May 2020, and the most recent revision was in February 2023, when the repo rate was raised to 6.50%.
Economic and Inflation Projections
- Real GDP growth for FY 2024-25 is projected at 6.4% (earlier 6.6%)
- Real GDP for FY 2025-26 revised from 6.9% to 6.7% due to global uncertainties
- CPI Inflation for FY 2024-25 estimated at 4.8%, with Q4 at 4.4%
- CPI Inflation for FY 2025-26 projected at 4.2% (assuming normal monsoon)
Key Announcements
Banking Security Measures: RBI will launch ‘bank.in’ as an exclusive Internet domain for Indian banks, starting April 2025. A ‘fin.in’ domain for the financial sector will follow
Additional Factor of Authentication (AFA) to be extended to international digital payments : Banks and NBFCs advised to strengthen cybersecurity measures and incident response mechanisms
Financial Literacy & Market Reforms: Financial Literacy Week (starting 24 February 2025) will focus on women’s financial decision-making with the theme “Financial Literacy: Women’s Prosperity”
A working group will review trading and settlement timings for RBI-regulated markets and submit a report by 30 April 2025
This repo rate cut signals RBI’s confidence in moderating inflation while ensuring sustained economic growth.
