RBI MPC Meet: Governor Sanjay Malhotra Announces 25 bps Rate Cut

RBI MPC Meet: In the first policy meeting of FY26, RBI Governor Sanjay Malhotra announced a 25 basis point rate cut, bringing the repo rate down to 6%. The monetary policy committee (MPC) also changed the policy stance to 'accommodative' from 'neutral.'

The governor acknowledged the uncertainty arising in the geopolitical sphere. "The global economic outlook is fast changing. The recent trade tariff related measures have exacerbated uncertainties, clouding the economic outlook across regions, posing new headwinds for global growth and inflation," the RBI governor said.

Uncertainty dampens growth by affecting investment and spending decisions, he added.

The markets reacted tepidly to the rate cut announcement, with both the Sensex and Nifty trading in the red. As of 10:23 am, the BSE Sensex stood at 73,917.88, down over 300 points or 0.43%. Sector-wise, Nifty IT emerged as the worst performer index, slipping more than 1,000 points or 3.08%. On the other hand, Nifty FMCG gained over 500 points, rising more than 1% following the 25 bps rate cut.

GDP Growth Projections

India's real GDP is projected at 6.5% for FY26. "Investment activity has gained traction and is expected to improve further on the back of sustained higher capacity utilisation," the RBI governor said. However, Malhotra mentioned that export levels might be impacted negatively owing to global uncertainties.

"Merchandise exports will be weighed down by global uncertainties, while services exports are expected to remain resilient," Malhotra said. For FY26, RBI has projected GDP growth at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. These estimates are lower than previous growth projections.

Meanwhile, inflation is estimated at 4% for the current fiscal, with CPI expected at 3.6% for Q1, 3.9% in Q2, 3.8% in Q3 and 4.4% in Q4.