The Monetary Policy Committee (MPC) of the Reserve Bank of India, during its meeting from April 7 to 9, observed that the inflation rate remains in line with the forecast. In view of this, the committee was of the opinion that the policy needs to be made growth friendly. This has come to light from the details of the meeting released today by the Reserve Bank.
Earlier this month, the committee had decided to cut the policy repo rate by 25 basis points. In the last meeting held in February also, the repo rate was cut by 25 basis points. In this meeting the stance has been changed from neutral to inclusive.
Reserve Bank Governor Sanjay Malhotra said, ‘When inflation based on consumer prices is decisively around its target level of 4 per cent and growth is still moderate and improving, monetary policy should support domestic demand to accelerate growth.’ While favoring the rate cut, he said that this will boost private consumption and increase private corporate investment activities.
Regarding the global trade war, Malhotra said that the external impact on the Indian economy is comparatively less and it is in excellent shape. He said India’s growth is largely driven by domestic demand. The Reserve Bank has estimated the inflation rate based on the Consumer Price Index to be 4 percent in 2025-26. GDP growth is estimated to be 6.5 percent.
Deputy Governor M Rajeshwar said, ‘On assessing the overall situation, we find that the inflation outlook remains favourable. At the same time, there is pressure on GDP growth to slow down.’ In view of the current environment of unprecedented global uncertainty along with the ongoing tariff war, Rao said that the situation is not clear regarding the impact of US tariffs on India and America is India’s largest export centre, hence it can have both direct and indirect impact on trade, financial markets and domestic economic activities.
Citing global uncertainties due to trade war, Interior member Rajeev Ranjan said inflation is now in a decisive phase of decline, hence there is no risk of domestic inflation on the rise. This makes sense given the continued cash infusion and policy changes. External member Ram Singh said, ‘In view of the low inflation rate, the committee should support growth by cutting the repo rate.’
First Published – April 23, 2025 | 11:02 PM IST
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