MUMBAI: The Reserve Financial institution of India’s Financial Coverage Committee lower the coverage repo price by 25 foundation factors to five.25%, down from 5.50% within the October 1 coverage evaluate, whereas retaining a impartial stance. The RBI additionally hiked FY26 GDP forecast to 7.3% from 6.8% earlier and lowered inflation forecast to 2%.RBI governor Sanjay Malhotra introduced measures to inject practically Rs 1.45 lakh crore of liquidity into the bond market via Rs 1 lakh crore of bond repurchases and a three-year greenback–rupee swap value $5 billion. Decreasing the inflation forecast and elevating progress projections, Malhotra mentioned the financial system was in a “uncommon Goldilocks interval” because of benign inflation and robust progress, creating room to bolster the momentum.
That is the primary price lower since February 2025 and follows inflation settling throughout the goal band of two% to 4%, with home progress holding agency regardless of world commerce tensions.The RBI revised its 2025-26 actual GDP progress projection to 7.3%, up from 6.8%. Quarterly projections now stand at 7% for Q3 (6.4% earlier) and 6.5% for This autumn (6.2% earlier). For the following monetary yr, progress has been projected at 6.7%, with Q2 pegged at 6.8%. Malhotra mentioned GST cuts have supported general demand, whereas rural demand has been lifted by good monsoon prospects.CPI inflation for 2025-26 is projected at 2%, decrease than the sooner estimate of two.6% because of easing meals costs. Quarterly projections are 0.6% for Q3 (1.8% earlier), 2.9% for This autumn (4.0%), 3.9% for Q1 of 2026-27 (4.5%), and 4% for Q2 FY26. Malhotra famous that inflation pressures have been even decrease contemplating that half of the current rise within the index got here from treasured metals.The central financial institution attributed the revisions to easing meals costs and GST rationalisation, partly offset by weak exterior demand.The announcement comes amid current rupee depreciation to round 89.84–90 per greenback, even because the RBI maintains reserves of $686 billion, offering import cowl of greater than 11 months. Malhotra mentioned the exterior sector stays resilient regardless of FII outflows and challenges in merchandise exports, supported by robust providers exports and remittances.Main central banks, together with the US Federal Reserve and the ECB, held charges final month, although expectations of coverage easing in 2026 have grown. Home information has been supportive, with Q2 GDP rising 8.2% on the again of providers and funding power, and October CPI inflation at 0.25%, the bottom in many years because of GST cuts and regular meals provides.The speed lower is anticipated to enhance liquidity and assist investments within the last quarter of the fiscal yr. Bankers mentioned the governor appeared to have acted regardless of pressures on the rupee because the window for a price lower might slim subsequent yr when inflation begins to rise from this yr’s low base.