RBI MPC Minutes | Domestic demand steady, global risks rise, inflation softens – key highlights here

At its 54th meeting held between 7-9 April 2025, the Reserve Bank of India’s Monetary Policy Committee (MPC) unanimously voted to reduce the policy repo rate by 25 basis points to 6%.The stance was shifted from ‘neutral’ to ‘accommodative,’ signalling the central bank’s intent to nurture domestic growth amid a softening inflation trajectory and rising global uncertainty.RBI projects 6.5% GDP growth for FY26The RBI revised its GDP growth forecast for 2025-26 down to 6.5%, citing the impact of global trade disruptions triggered by a wave of reciprocal tariffs. Despite domestic resilience — bolstered by strong rural demand and public capital expenditure — the RBI acknowledged risks to investment sentiment and external trade. Growth is expected to remain below potential, with members urging policy support to shield momentum.CPI inflation seen well-aligned with targetCPI inflation fell to 3.6% in February 2025, supported by a sharp seasonal correction in food prices and deflationary trends in fuel. With record wheat and pulses production expected, food inflation is likely to remain benign. The RBI’s forecast pegs FY26 CPI inflation at 4%, with quarterly projections ranging between 3.6-4.4%, assuming a normal monsoon.Sanjay Malhotra | Accommodative shift warranted by benign inflation and global turmoilRBI Governor Malhotra said inflation dynamics had turned decisively favourable, with headline CPI aligning closely with the 4% target. While India remains relatively insulated, global trade frictions could dampen exports and investment. He supported a 25 bps cut and a policy shift to accommodative, noting it would bolster consumption and private sector revival at a time when the global environment remains volatile.Also read: RBI amends liquidity coverage ratio norms, halves digital deposit buffer to 2.5%M Rajeshwar Rao | Global shocks reinforce case for timely growth supportDeputy RBI Governor Rao highlighted the broad-based fall in food prices and the fourth consecutive month of CPI decline. While domestic growth has rebounded from a weak second quarter, he flagged persistent global headwinds. He backed the rate cut and stance change, calling for policy vigilance in navigating external shocks while anchoring inflation.Rajiv Ranjan | Growth needs policy impetusRBI Executive Director Rajiv Ranjan said inflation projections showed greater certainty of alignment with the 4% target, creating policy room to address growth risks. He stressed that India must prioritise domestic demand amidst a fragmented global trade landscape. He endorsed the accommodative stance as a clear signal for further easing if warranted.Dr Nagesh Kumar | Larger rate cut needed to revive private investmentDr Kumar viewed the Trump-led tariff wave as a “mixed blessing,” posing recessionary risks globally while creating limited export opportunities for India. Given subdued FDI inflows and moderated credit growth, he called for a bolder 50 bps cut but backed the consensus 25 bps reduction as a phased step. He strongly favoured proactive fiscal and monetary action to sustain momentum.Saugata Bhattacharya | Policy must pre-emptively shield economy from global dragExternal member Bhattacharya warned of prolonged global disruptions from tariff wars, which could weigh on exports, remittances, and capital flows. Although initially hesitant to endorse an accommodative stance, he supported the move after clarification that it rules out hikes without promising continuous easing. He cited falling energy prices and stable inflation expectations as grounds for a 25 bps cut.Ram Singh | Growth below potentialProfessor Ram Singh underscored the durability of the inflation correction, citing benign food prices and improved rabi crop prospects. Despite moderate GDP growth of 6.5% projected for FY26, he noted that the services sector remains robust and investment sentiment is improving. He voted in favour of easing and supported the accommodative stance to accelerate transmission.

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