RBI Monetary Policy Report of April 2025, released alongside the MPC resolution, outlines the GDP growth forecast and inflation projection for the coming months. The Monetary Policy Committee (MPC), in its 54th meeting and the first of the financial year 2025–26, unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6 per cent with immediate effect.
Key Policy Decisions
- The Monetary Policy Committee (MPC) unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6 per cent with immediate effect. The repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks.
- As a result, the Standing Deposit Facility (SDF) rate under the Liquidity Adjustment Facility (LAF) has been adjusted to 5.75 per cent. The SDF allows banks to park excess funds with the RBI without any collateral.
- The Marginal Standing Facility (MSF) rate and the Bank Rate have both been revised to 6.25 per cent. MSF stands for Marginal Standing Facility, a provision made by the RBI that enables scheduled commercial banks to obtain overnight liquidity if inter-bank funds completely dry up. It is an emergency facility that allows banks to borrow at a rate higher than the repo rate.
- These rate adjustments are consistent with the RBI’s objective of achieving the Consumer Price Index (CPI) inflation target of 4 per cent, within a flexible band of ±2 per cent, while also supporting economic growth.
