India's central bank cuts CRR to 4%; keeps repo rate unchanged at 6.5%

CRR is a percentage of a bank's deposits that must be kept with the central bank as reserves.

The repo rate remains unchanged for the 11th consecutive time since it was increased to 6.5 per cent in February 2023.

Consequently, the standing deposit facility rate remains unchanged at 6.25 per cent and the marginal standing facility rate and the bank rate at 6.75 per cent.

The MPC also decided to continue with the neutral monetary policy stance and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth, an official release said.

These decisions are in line with the target of achieving the 4-per cent medium-term target for consumer price index (CPI)-based inflation within a band of plus or minus 2 per cent, while supporting growth, the bank noted.

The central bank projected real gross domestic product (GDP) growth for fiscal 2024-25 (FY25) at 6.6 per cent, with the third quarter (Q3) growth at 6.8 per cent and the Q4 growth at 7.2 per cent.

Real GDP growth for Q1 FY26 is projected at 6.9 per cent and for Q2 in the next fiscal at 7.3 per cent.

CPI inflation for FY25 is projected at 4.8 per cent, with Q3 at 5.7 per cent and Q4 at 4.5 per cent. CPI inflation for Q1 FY26 is projected at 4.6 per cent and for Q2 in the next fiscal at 4 per cent.

ALCHEMPro News Desk (DS)