The MPC’s Monetary Policy Committee (MPC) has reduced the rate of 50 basis points (BPS)

The Indian Reserve Bank (RBI) reduced the main ribau rate through 50 basis points greater than expected on Friday, a third consecutive reduction. It also reduced the backup rate for banks, as silent inflation provided space for policy makers to focus on supporting economic growth.

The Monetary Policy Committee at the Indian Reserve Bank (MPC) cumulating Cut Ribo rate of 100 basis points since the February policy review. However, the RBI Sanjay Malhotra ruler explained that the central bank has a limited space to support growth. Consequently, the position of monetary policy has been changed from “equal” to “neutral”.

According to Malhotra, the central banks in the emerging market economies had a more challenging task for stabilizing their economies against universal indirect in this “global medium” amid increasing fluctuations in capital flows and exchange rates, as well as restricted policy space. He added that the Indian economy presented a picture of strength, stability and opportunity.

Malhotra calls for the price of stability to maintain the power of purchase

#RBIMPC | "There is stability on the three fronts – price, financial and political," Ribi Sanjay Malhotra says #RBI #RBIPOLICY #Sanjaymalhotra #reporate pic.twitter.com/dkkevlk0gp

– Moneycontrol (Moneycontrolcom) June 6, 2025

Malhotra claimed that price stability has maintained the purchase strength, adding that there is stability on all three fronts – price, financial and political. According to the RBI governor, the stability of prices has sparked certainty for families and companies in their decisions in savings and investment. It also guarantees homogeneous interest rates and financial conditions, all of which encourage consumption, investment and total growth.

The Ministry of Statistics and Implementation of the program stated that the RBI rate came amid a steady decrease in inflation at a time when the gross domestic product of India grew by 7.4 % in the fourth quarter of the fiscal year 2024-25. The ministry also revealed that retail enlargement decreased to 3.16 % in April, a decrease from 3.34 % in March and much less than the 4 % RBI rest level. The government of India estimated the total fiscal year growth 2024-25 GDP at 6.5 %.

“This decision is in line with the goal of achieving a medium-term goal for the Consumer Prices Index (CPI) by 4 percent within the range of +/-2 per cent, while supporting growth.”

-Sanjay Malhotra, Governor of the Reserve Bank in India

RBI reduced the rate of 25 basis points at the previous MPC meeting held from 7 to 9 April, from 6.25 % to 6 %. After that, after a similar reduction in February, from 6.5 % to 6.25 %, indicating the central bank axis towards a pro -growth policy amid inflation pressure.

The mood of the RBI policy market where the Indian stock market witnessed a sharp shift

Indian stock market opinion A sharp shift after a flat start in the morning, as both standard indicators gained strength after the declaration of RBI policy. Sensex 488 points or 0.60 % jumped to 81,930.37, while NIFTy rose 168 points or 0.68 % to 24,919.30, where investors chanted the central bank’s position.

The NIFTy Bank index also increased by approximately 500 points or 0.90 % within minutes of the advertisement, as it was circulated by about 56,260.75. Sectors such as banks, cars and Realty have led the gathering with about 1 % gains, and raising the total feelings.

The RBI governor said that the rate of permanent deposit facilities (SDF) under liquidity control facilities (LAF) should be modified to 5.25 %, the marginal permanent facilities rate (MSF) and the bank rate to 5.75 %. He pointed out that in the future, economic activity will continue to maintain momentum in 2025-26, with the support of special consumption and traction in the formation of fixed capital. Atole Monga, CEO and co -founder of the Basic Loan loan, said the upcoming MPC meeting may be a major indication of the broader economic recovery in India.

RBI governor also said that in order to provide solid liquidity, the central bank decided to reduce the cash reserve rate (CR) by 100 basis points to 3 % of 4 % before. He added that this will take place during the year in four equal segments of 25 basis points, each of which enters into force from the two weeks who start on September 6, October 4, November 1, and November 29 of this year. The reduction in CRR will be released by the initial liquidity of about 2.5 rupees to the banking system by the end of November 2025.

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