First Indian Interest Rate Cut of the Cycle
February 7, 2025
The Reserve Bank of India‘s Monetary Policy Committee enacted its first repo rate change since February 2023, a 25-basis point cut to 6.25%.
Inflation has declined. Supported by a favorable outlook on food and continuing transmission of past monetary policy actions, it is expected to further moderate in 2025-26, gradually aligning with the target. The MPC also noted that though growth is expected to recover from the low of Q2:2024-25, it is much below that of last year. These growth-inflation dynamics open up policy space for the MPC to support growth, while remaining focused on aligning inflation with the target.
The rate cut vote in India was unanimous, but officials also warned of a need for caution due to “excessive volatility in global financial markets and continued uncertainties about global trade policies coupled with adverse weather events.”
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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