RBI MPC meeting 2025: The new Reserve Bank of India (RBI) Governor Sanjay Malhotra will announce the interest rate decision of the Monetary Policy Committee (MPC) on Friday, February 7.
The MPC began its three-day meeting to discuss and set the new interest rates on Wednesday, February 5, and this was the first one since Malhotra took over the reins in December 2024, following the end of Shaktikanta Das’s tenure.
As a result, all eyes, including that of the markets is set on the MPC’s latest announcement.
“The RBI MPC meeting of Feb’2025 is significant in several ways,” said Suman Chowdhury, Executive Director & Chief Economist at Acuité Ratings & Research. “This is the first meeting of the MPC under the leadership of the new RBI Governor. Secondly, it comes at a time when there are several headwinds in both the external and the domestic environment.”
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When and where to watch RBI MPC announcement 2025?
The interest rate announcement begins at 10am and it can be watched live on the RBI’s official YouTube channel.
What are expectations from 2025 RBI MPC announcement?
This time, a 25 basis point repo rate cut has been widely expected to take place to inject more liquidity into the market, taking the benchmark lending rate from the current 6.5% to 6.25%.
This is because India’s GDP growth slowed down to a 5.4% for the second quarter of the financial year 2024-25. This was the slowest growth in seven consecutive quarters.
It also comes at a time when inflation for December 2024 was found to have eased down to a four-month low of 5.22%, making the conditions for a potential rate cut more favourable.
“A 25bps rate cut is highly anticipated, along with further initiatives to boost liquidity in the banking sector,” said Abhishek Pandya, Research Analyst at StoxBox. “Recently, the RBI has implemented important measures to enhance liquidity, such as an Open Market Operation of Rs. 60,000 crore and a 56-day Variable Rate Reverse Repo of Rs. 50,000 crore, aimed at sustaining market liquidity.”
“Moreover, inflation indicators have shown improvement, aligning with expectations, as the CPI inflation decreased from a 14-month high of 6.2% in October 2024 to 5.2% in December 2024, primarily due to lower food inflation,” he added.
Another aspect that can influence the repo rate decision is how “the change in the US Government has dramatically altered the expectations regarding Fed’s monetary policy and the interest rate trajectory, translating to a stronger USD and capital outflows as well as a sharp currency depreciation in developing economies like India,” Chowdhury added.
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What happened in previous MPC meeting?
During the previous MPC meeting in December 2024, the RBI may have made a ₹1.16 trillion liquidity boost, after it announced a 50 basis point cut in the cash reserve ratio (CRR), making it 4%.
However, it kept the benchmark repo rate unchanged at 6.5%.
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The MPC meet came just days after the Union Budget 2025 was presented by Finance Minister Nirmala Sitharaman in Parliament on February 1, 2025.
Key announcements included major tax reforms such as zero income tax for those earning below ₹12.75 lakh per annum, enhanced credit guarantee for Micro, Small and Medium Enterprises (MSMEs) with customised credit cards, exemption on custom duty for 35 additional capital goods for electric vehicles (EVs), A national framework to be formulated for promoting Global Capability Centres (GCCs), and a ₹500 crore allocation for a Centre of Excellence in Artificial Intelligence, among others.
“The budget has provided balanced support for both domestic consumption and investment demand, notably through substantial income tax relief for individual taxpayers,” Pandya said. “This relief is expected to stimulate urban consumption, which has been sluggish for several quarters.”
