RBI Monetary Policy Committee Moves: Bold Cut, Balanced Stance

New Delhi(ABC Live): RBI Monetary Policy Committee: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) held its 55th meeting from June 4–6, 2025. With inflation on a declining trajectory and growth lagging below expectations, the committee voted for a frontloaded 50 basis point (bps) cut in the policy repo rate to 5.50%, while changing the policy stance from ‘accommodative’ to ‘neutral’.

🔍 Key Decisions

• Policy repo rate: Reduced from 6.0% to 5.50%

• Standing Deposit Facility (SDF): Adjusted to 5.25%

• Marginal Standing Facility (MSF) and Bank Rate: Adjusted to 5.75%

• Policy stance: Changed from ‘accommodative’ to ‘neutral’

📊 Growth & Inflation Outlook

• GDP:

  • Q4 (2024–25): 7.4%

  • FY 2025–26 Projection: 6.5%

• CPI Inflation:

  • April 2025: 3.2% (6-year low)

  • FY 2025–26 Projection: 3.7%

📉 Rationale Behind RBI Monetary Policy Committee Decisions

• Inflation is expected to stay below target for most of the fiscal year, supported by normal monsoon forecasts and subdued commodity prices.

• Growth momentum remains fragile—public capex has supported recovery, but private investment and urban consumption are lagging.

• A front-loaded cut offers better transmission and signalling, especially when liquidity support is already strong.

🌐 Global Context

• Trade projections have been revised downward by the WTO and the IMF.

• China’s deflation and tariff-related uncertainty pose risks.

• Oil prices and commodity inflation are easing, but geopolitical flare-ups and currency risks persist.

⚖️ Strategic Shift

The decision to change the stance to ‘neutral’ despite easing indicates a desire for flexibility and careful data dependence going forward. This balances short-term stimulus with long-term credibility.

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🧾 II. RBI Monetary Policy Committee Member-wise Assessment Table