RBI's Monetary Policy Committee cuts repo rate by 25 basis points to 6.25%
The RBI's Monetary Policy Committee, in its first meeting under Governor Sanjay Malhotra, unanimously cut the policy repo rate by 25 basis points to 6.25% on 7 February 2025.
Summary
The Monetary Policy Committee (MPC) of the Reserve Bank of India held its 53rd meeting from 5 to 7 February 2025 under the chairmanship of Governor Sanjay Malhotra, his first policy since taking charge. The MPC unanimously reduced the policy repo rate by 25 basis points from 6.50% to 6.25%; the standing deposit facility rate was adjusted to 6.00% and the marginal standing facility rate and Bank Rate to 6.50%. It unanimously kept the stance neutral. The RBI described it as the first rate cut in nearly five years. Real GDP growth for 2025-26 was projected at 6.7% and CPI inflation for 2025-26 at 4.2%, against the medium-term target of 4% within a band of ±2%.
Key facts
- Meeting
- 53rd MPC meeting, 5–7 February 2025, chaired by Governor Sanjay Malhotra
- Repo rate
- Cut by 25 bps from 6.50% to 6.25% (unanimous)
- Corridor
- SDF 6.00%; MSF and Bank Rate 6.50%
- Stance
- Neutral (unchanged)
- Projections
- Real GDP 2025-26: 6.7%; CPI inflation 2025-26: 4.2%; CPI 2024-25: 4.8%
- Inflation target
- 4% CPI within a band of +/- 2%
- Next meeting
- 7–9 April 2025
Practice MCQs 5 questions
To what level did the RBI's Monetary Policy Committee cut the policy repo rate on 7 February 2025?
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Correct answer: C — 6.25%
The MPC cut the repo rate by 25 basis points from 6.50% to 6.25%.
After the RBI's policy decision of 7 February 2025, at what rate did the standing deposit facility (SDF) stand?
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Correct answer: B — 6.00%
With the repo rate at 6.25%, the SDF rate was adjusted to 6.00% and the MSF rate and Bank Rate to 6.50%.
Who chaired the 53rd meeting of the RBI's Monetary Policy Committee held from 5 to 7 February 2025?
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Correct answer: C — Sanjay Malhotra
The 53rd MPC meeting was chaired by Governor Sanjay Malhotra; it was his first monetary policy. Rajiv Ranjan attended as a member.
In February 2025, the RBI projected real GDP growth for 2025-26 at:
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Correct answer: D — 6.7%
Real GDP growth for 2025-26 was projected at 6.7%; 6.4% was the First Advance Estimate for 2024-25.
Consider the following statements about the RBI's monetary policy of 7 February 2025: 1. The decision to cut the repo rate was unanimous. 2. The MPC changed its stance from neutral to accommodative. 3. CPI inflation for 2025-26 was projected at 4.2%. Which of the statements given above are correct?
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Correct answer: A — 1 and 3 only
Statements 1 and 3 are correct: the MPC voted unanimously for the cut and projected 2025-26 CPI inflation at 4.2%. Statement 2 is wrong, as it unanimously kept the stance neutral.