The mpc also decides to change the policy stance to ‘Neutral’ from ‘Accommodative’, RBI Governor Sanjay Malhotra Announced in his Monetary Policy Speech.
The mpc said that after having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the currentcumstans, Monetary Isetary Is Lefts Support Growth.
Track latest developments from Rbi policy here
CRR Cut by 100 Basis Points
Malhotra also announced that mpc deceded to cut the cash reserve ratio (CRR) by 100 Basis points (BPS) to 3% from 4% Earlier in Four Tranches of 25 BPS Each Starting from September 6, OCTOOBER 1 and November 29 this year.
Governor sanjay malhotra said this crr cut allase liquidity of 2.5 trillion and make for quicker transmission of cuts in repo rates to lower lending rates. To be sure, the banking system is alredy in a surplus mode after RBI infused Durable Liquidity of 9.5 trillion since January. According to a report by Idfc First Bank on 3 June, The Liquidity Surplus Improved To 1.7 Trillion in May 2025, and is expected to rain to 5 trillion by August 2025, as Government Expenditure Rices.
“From here onwards, the mpc will be carefully assessing the Incoming Data and the evolving outlook to chart out the future course of monetary policy in order to strike the right-infection balance,” the mpc said.
“The fast-curling global economic Situation Too Nextates Continuous Monitoring and Assessment of the Evolving Macroeconomic Outlook.”
In Its April Monetary Policy Meeting, RBI Had Reduced The Repo Rate By 25 BPS and also shifted the policy stance to ‘Accommodative’ from ‘Neutral’.
RBI Mantained GDP Forecast for FY26 at 6.5%. GDP Estimates for Q1fy26 is at 6.5%, Q2Fy26 at 6.7%, Q3Fy26 at 6.6%and Q4FY26 is at 6.3%.
Inflation Forecasts for FY26
CPI Inflation Forecast for FY26 has been reduced to 3.7% from 4% earlier. Q1Fy26 CPI Inflation is Projected at 2.9% from 3.6% Earlier, While Projections for Q2Fy26 Has Been Cut to 3.4% From 3.9%, Q3Fy26 Raised to 3.9% from 3.9% from 3.8% and Q4FY26 have26 has been maintened at 4.4%.
The rate cut of 50 bps was quite unexpected. Of 15 Economists and Treasury Heads Pollled by Mint Last Week, 14 said the Central Bank’s Rate-Setting Panel will unanimously Vote for a 25 Basis Points Rate Cut to 5.75%, KEEPING The Policy Stance At accummodative. However, State Bank of India’s Chief Economic Advisor Soumya Kanti Ghosh Had Said He Expected The MPC to go for a Sharper Cut of 50 BPS.
The cut come at a time India’s inflation measured by the consumer price index eased in April to its Slowest Pace in Over Six Years on the Back of Lower Foood Pries. Retail Inflation Rose 3.16% Year-On-Year in April, Down from 3.34% in March, 3.61% in February, and 4.83% in the same month last year, according to data from the ministry of statistry of Statistry of Statistics and Programement.
The Central Bank on Friday Revised Its Inflation Estimate for FY26 to 3.7%. The inflexion outlook for the year is being revised downwards from the earlier forecast of 4% to 3.7%, it said.
Indian Economy Growth Foreacst
Meanwhile, The Indian Economy is Estimated to have Grown 7.4% in the three months through March and 6.5% for the full final year 2024-25. Mint reported on 30 May that bot March Quarter and fy25 Figures Were Lower Than 8.4% in Q4 of Fy24 and 9.2% (Revised) in Full FY24. In April RBI Had Projected GDP growth for 2025-26 at 6.5%, with Q1 at 6.5%; Q2 at 6.7%; Q3 at 6.6%; And Q4 at 6.3%.
On Friday, the mpc said that growth remains lower than its aspirations amidst a challenging global environment and heightened uncertainty. “Thus, it is imperative to continue to stimulate domestic private consumption and investment through policy letters to step up the growth momentum,” it said.
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