The Reserve Bank of India lowered the benchmark policy rate by lowering the repurchase rate by 25 basis points for the second time, and changed it to an indication on April 9.
The title inflation rate for February 2025 was 3.6%, and the average for January 5, 2025 was 4.0%, which helped further disinfection and food inflation showed very benign. Core inflation (excluding fuel and food), although February 2025 accounts for 4.1% from 3.6% in January, it still accounts for the 4% range. “[These developments]suggest that the underlying inflationary impulse in the economy is a benign and good anchor,” Malhotra said.
All other external and internal members have similar views on growth inflation dynamics, and they unanimously voted for changes in slowing down speed and stance. Professor Ram Singh, Dean of the Delhi School of Economics, said: “The global economic outlook has been changing rapidly over the past few months. Recent measures related to trade tariffs have exacerbated uncertainty over the economic outlook throughout the region, bringing new headwinds to global growth and inflation.
The greater focus of MPC is the impact of the trade war on growth prospects. “In this time of uncertainty, there is more need to stimulate private consumption and investment through fiscal and monetary policies to maintain growth momentum,” said Nagesh Kumar, director and CEO of the New Delhi Institute of Industrial Development, New Delhi.
On the positive side, the growth in total deposits and bank credit remains as pointed out by Deputy Governor M Rajeshwar Rao. In recent months, the RBI has taken a series of measures that are expected to ensure orderly market conditions, thereby facilitating currency transmission, which has also improved. (However) global headwinds pose a downward risk to growth. “Our model-based forecasts suggest that growth will recover to 6.7% over the 2026-27 period, which is still below 7.0%. However, according to external member Saugata Bhattacharya, the change in this position does not imply further monetary policy. “I agree that changing the position is adaptive, while noting that this does not provide guidance for the intended avenues mitigation pathways.” “I think these decisions are appropriate policy responses at this point in view of the ever-evolving balance of domestic growth-inflation dynamics.”
