The Reserve Bank of India’s Monetary Policy Committee (MPC) today reduced the repo rate by 25 basis points to 5.25% and maintained a neutral policy stance, indicating room for future adjustments. In addition to the rate cut, the RBI introduced several liquidity-support measures, including ₹1 lakh crore of OMO purchases and a $5 billion USD/INR swap, aimed at easing prevailing liquidity pressures in the financial system.
The tone of the policy was distinctly confident, supported by an improving macroeconomic backdrop. The RBI highlighted a combination of cooling core inflation, softening global commodity prices, and resilient domestic demand as key reasons for easing policy. The central bank reiterated that inflation is firmly on a moderating trajectory, while growth remains robust across sectors.
Upgraded Forecasts Signal Strengthening Momentum
RBI has upgraded its GDP growth outlook, projecting FY26 growth at 7.3%, up from 6.8% earlier. Growth for Q3FY26 has been raised to 7.0% from 6.4%, while Q4FY26 is now estimated at 6.5% compared with 6.2% previously. For the next fiscal, Q1FY27 growth has been revised to 6.7% from 6.4%, and Q2FY27 is projected at 6.8%.
RBI has significantly lowered its CPI inflation projections for FY26 to 2.0% from 2.6% earlier. The forecast for Q3FY26 has been cut to 0.6% from 1.8%, while Q4FY26 is now expected at 2.9% compared with 4.0% previously. Looking ahead, inflation for Q1FY27 has been reduced to 3.9% from 4.5%, and Q2 FY27 is projected at 4.0%.
View on Stock Market & Economy
The combination of a rate cut, improved growth outlook, and lower inflation creates a supportive environment for economic expansion. Cheaper borrowing costs, improved liquidity, and strong consumption trends are likely to drive investment and credit growth, especially in rate-sensitive sectors such as banks, real estate, autos, and consumer discretionary. The equity markets are expected to respond positively in the near term, supported by lower discount rates and better earnings visibility.
However, potential risks remain, including global volatility, currency pressures, and commodity-price fluctuations. Overall, the policy indicates cautious optimism and is broadly positive for both the economy and the stock market.
| Key Rates | Current | Previous |
| Repo Rate | 5.25% | 5.50% |
| Reverse Repo Rate | 3.35% | 3.35% |
| SDF (Standing Deposit Facility) | 5.00% | 5.25% |
| MSF (Marginal Standing Facility) | 5.50% | 5.75% |
| Bank Rate | 5.50% | 5.75% |
| CRR (Cash Reverse Rate) | 4.50% | 4.50% |
| SLR ( Statutory Liquidity Ratio ) | 18.00% | 18.00% |
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