RBI monetary policy 2025: Key takeaways as repo rate cut again amid global tariff tensions
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Synopsis
he RBI slashed the repo rate to 6.0% amid rising global trade tensions and downgraded India’s FY26 growth forecast. Inflation remains stable, while global uncertainty prompts the central bank to support a slowing economy.
In its first monetary policy announcement for FY2025-26, the Reserve Bank of India (RBI) on Wednesday delivered a second consecutive repo rate cut and flagged mounting concerns over the global economic climate, especially after the recent protectionist moves by the United States.
RBI Governor Sanjay Malhotra described the beginning of the new fiscal year as “anxious,” pointing to growing volatility in global markets, a falling US dollar, and declining crude oil prices as signs of deeper economic tremors.
Also read: RBI Guv assures swift transmission of repo rate cut benefits, says US tariff will have less impact
Key takeaways from the RBI Monetary Policy 2025
Repo rate cut to 6.0%: The RBI cut the benchmark repo rate by 25 basis points, from 6.25% to 6.0%, marking its second straight rate reduction in a bid to support a slowing economy. This move is likely to make home and business loans cheaper.
Global headwinds dominate concerns: Governor Malhotra warned of new economic headwinds, triggered by the US’s fresh tariff hikes, that have heightened global uncertainty, weakened the dollar, and rattled financial markets. The RBI is closely monitoring ripple effects on inflation and growth.
GDP growth forecast downgraded: India’s FY26 GDP growth forecast has been revised down to 6.5% from the earlier projection of 6.7%, citing global trade disruptions and demand-side weaknesses.
Quarter-wise GDP outlook: Q1: 3.6%, Q2: 3.9%, Q3: 3.8%, Q4: 4.4%
The RBI noted that growth is likely to remain sluggish in the first half of the fiscal year, with a mild recovery expected in later quarters.
CPI inflation projected at 4%: Headline inflation (Consumer Price Index) is expected to average 4% for FY26, within the RBI’s target range, offering room for further policy easing if global shocks persist.
Food inflation at 21-month low: Encouragingly, food inflation eased to 3.8% in February, the lowest in 21 months, thanks to seasonal corrections in vegetable prices.
Also read: RBI alert: Submit THIS document by April 10 or risk losing access to your savings
RBI Monetary Policy 2025: Impact
Borrowers: Good news for anyone repaying loans — you may pay less every month.
If you’ve taken a home loan, car loan, or personal loan, you could soon see your EMIs (monthly payments) go down. This is because when the RBI cuts the repo rate, banks usually lower the interest they charge on loans.
Investors: Stocks may go up, but don’t expect a smooth ride — global factors still matter.
When interest rates drop, stock markets often rise because businesses can borrow more easily and grow faster. But, at the same time, the global economy is shaky (due to factors like US tariffs), which may hold back big gains.
Economy-watchers: RBI is trying to boost the economy without letting prices shoot up.
The RBI is walking a tightrope! It wants to support India’s growth (by lowering interest rates) but also needs to control inflation (keep prices stable). It’s trying to balance both, especially since global risks are increasing.