Rbi mpc meet: The Reserve Bank of India (RBI) on Friday reduced the major policy rate repo rate to 6.25% to 6.25% after nearly five years to speed up the sluggish economy. Repo rate cuts remained in accordance with the market estimate. Reducing the repo rate means that the monthly installment (EMI) is expected to be reduced on various loans including Home Loan, Car Loan. This was the first meeting of MPC in the leadership of Sanjay Malhotra, the new Governor of RBI. The Governor also clarified his attitude on the GDP growth rate, inflation and the continuously continuing decline in the rupee (Rupee Declines). On GDP growth, the governor said that the country’s economy is likely to move at a rate of 7%. At the same time, on the ongoing decline in the rupee, he said that the exchange rate cannot be seen daily, it should be seen in the long term.
No target for rupee- RBI Governor
RBI Governor Sanjay Malhotra said that the exchange rate policy has been the same for the last several years and the central bank has not targeted a “specific level or scope” for the rupee. The exchange rate of the rupee has come to an all -time low of 87.59 against the US dollar. The rupee fell 16 paise to close at a record low of 87.59 per dollar on Thursday.
This year, the rupee has broken about 2% so far
The rupee has fallen by about two percent so far this year. The rupee has fallen by 3.2% against the dollar since the results of the US presidential election on November 6, 2024, as compared to the dollar index in the same period by 2.4%. Foreign exchange reserves declined by US $ 45 billion in the last three months, the part of the RBI intervention in the foreign exchange market.
GDP growth expected to reach 7%- RBI Governor
The RBI estimated the growth rate of GDP (GDP) in the next financial year 2025-26 to be 6.7%. This is more than 6.4% for the current financial year 2024-25 ending 31 March, 2025.
India’s GDP growth rate in the July-September period of the current financial year 2024-25 came to the low-lying level of seven quarters to 5.4%, while the RBI itself estimated seven percent. The RBI Governor said that high capacity levels, financial institutions and companies are expected to improve stable investment due to better books and continuous emphasis on capital expenditure by the government.
He said, “The actual GDP growth for 2025-26 is estimated to be 6.7%, keeping all these factors in mind,” he said. The economy is expected to grow at the rate of 6.7% in the first quarter of the next financial year, 7.0% in the second quarter and 6.5% in the third and fourth quarter. The risk will remain the same on both sides. ”