RBI MPC Meeting 2025: Key Announcements and Policy Outcomes

The outcome of the  RBI MPC Meeting 2025 was announced on 9 April 2025. RBI Governor Sanjay Malhotra headed the meeting which concluded with a 25 basis point rate cut. This marks the second consecutive rate cut by the Governor since taking office. The repo rate is at which the RBI lends money to commercial banks. A reduction of 25 basis points means that banks can lower their interest rates, which is beneficial for consumers and can help boost economic activity. In this blog, let us have a look at Sanjay Malhotra RBI speech and key highlights of the RBI MPC Meeting 2025.

RBI MPC Highlights

RBI MPC has a total six members where three are appointed by the Reserve Bank of India (RBI) and the rest three by the Central Government. Further, let us have a look at RBI monetary policy highlights:

1. Rate Cut:

The repo rate April 2025 was cut by 25 basis points, bringing it down from 6.25% to 6%, primarily to support economic growth while balancing inflation. RBI shifted its policy stance from neutral to accommodative, which indicates that it is open to implementing further rate cuts in upcoming meetings if needed.

The key reason for the rate cut was that inflation was coming under control. For instance, in February 2025, the inflation rate stood at 3.6%. This gives the RBI confidence that cutting the repo rate won’t cause prices to rise too much. Also, if inflation is low, it can sometimes signal weak demand in the economy. In such cases, the RBI may lower the repo rate to boost demand.

Additionally, the 26% reciprocal tariff imposed by the U.S. was another concern, as it could impact Indian exports. To safeguard the economy from these potential challenges, the RBI planned to cut the repo rate. Apart from that, the Standing Deposit Facility (SDF) rate was reduced to 5.75%, and the Marginal Standing Facility (MSF) rate was reduced to 6.25%.

Reducing Inflation

2. CPI Inflation Forecast:

Moreover, in the meeting, keeping in mind the current challenges and future outlook, the central bank also provided a GDP forecast based on these actions. The full-year GDP projection was revised upward from 6.5% to 6.7% . Let us look at the quarterly GDP projections for the full year.

Quarter	Forecast
Q1FY26	6.5%
Q2FY26	6.7%
Q3FY26	6.6%
Q4FY26	6.3%

3. CPI Inflation Forecast :

Moreover, there were also discussions on inflation forecasting, where the full-year inflation estimate for FY26 was revised from 4.2% to 4%.  Furthermore, the quarterly projections for inflation are as follows:

Quarter	Forecast
Q1FY26	3.6%
Q2FY26	3.9%
Q3FY26	3.8%
Q4FY26	4.2%

4. Other Discussion

• UPI Limits: National Payments Corporation of India (NPCI) can update the UPI limits as per the needs of users, whereas the peer-to-peer (P2P) transactions remain at Rs.1 lakh .
• Gold Loans: RBI to release integrated draft guidelines for gold loans for all regulated entities.
• Stressed Asset Securitisation: Tentative framework to permit market-based securitisation of stressed assets other than ARCs.

How Will Rate Cut Help to Boost the Economy

This rate cut is expected to boost the economy. When interest rates are reduced, borrowers pay lower EMIs, which allows them to save more. Additionally, in the recent budget, income tax slabs were also reduced. Together, these collective measures help individuals increase their savings. As people save more, they are likely to spend more, which in turn boosts the revenues and earnings of companies. This cycle of increased consumption and improved business performance ultimately helps drive economic growth. All these factors are interconnected and play an important role in giving a boat to the economy.

Rate Cut Impact

What will be the Impact of RBI MPC on Investors

Interest rate decision today, though important for the economy, also have a significant impact on citizens. Let us understand it in detail:

• Affordable EMI: One of the impacts of the rate cut is that borrowers will benefit, especially those with existing loans on floating interest rates, as their EMIs will reduce. This will help lower their overall repayment burden. Additionally, new EMIs will also become more affordable for new borrowers. In light of the reduced rates, many borrowers may also consider refinancing their loans at lower interest rates to further reduce costs.
• Real Estate Boom: Since the EMI has come down, it encourages more people to buy properties. This leads to an overall increase in demand in the real estate segment. Apart from that, it also encourages builders and developers to launch new projects and complete the ongoing projects faster.
• Better Equity Performance: Since people save money on loan repayments and EMIs, they are usually able to spend more on goods and services, which helps to increase overall demand. As a result, both corporate and government firms can sell more and generate higher profits and margins. This is highly beneficial, as it leads to a rise in stock market prices and improved corporate earnings. Ultimately, this helps investors who have invested in equities to earn higher returns.
• Fixed Deposits Rates Decline: When rate cuts occur, the interest rate given by the banks on fixed deposits usually decreases simultaneously. This is mainly because banks adjust their fixed deposit rates in line with the lower cost of borrowing. As a result, FD returns come down. This may be slightly disappointing for investors who prefer safe and stable returns through fixed deposits. However, they can consider other investment options like equities and mutual funds, which generally offer higher returns, although with higher risk. Nowadays, various online platforms are available where investors can compare and choose the best investment options. They need to conduct proper analysis based on their risk-taking ability before making any investment decisions.

Reducing EMI

Conclusion

Investors and borrowers both got relief due to the current rate cut decision by the RBI. The central bank is doing its best to boost the economy and work towards the betterment of the citizens. The next RBI MPC meeting is scheduled between July 4 to 6, 2025 . If things remain stable, inflation stays under control, and the tariff issue gets resolved, we can expect another rate cut in the upcoming meeting. However, investors should stay updated with ongoing trends and choose their investments wisely, especially since rate cuts have already happened, and it’s important to invest consciously.

DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.