India's central bank cuts repo rate by 25 bps to 5.25%

Consequently, the standing deposit facility (SDF) rate shall stand adjusted to 5 per cent and the marginal standing facility (MSF) rate and the bank rate to 5.5 per cent.

The committee also decided to continue with its neutral stance after concluding its three-day review meeting.

Real gross domestic product (GDP) growth for fiscal 2025-26 (FY26) is projected at 7.3 per cent, with the third quarter (Q3) at 7 per cent and Q4 at 6.5 per cent. Real GDP growth for Q1 FY27 is projected at 6.7 per cent and Q2 FY27 at 6.8 per cent. The risks are evenly balanced, the monetary policy statement said.

“Looking ahead, domestic factors such as healthy agricultural prospects, continued impact of goods and services tax (GST) rationalisation, benign inflation, healthy balance sheets of corporates and financial institutions and congenial monetary and financial conditions should continue to support economic activity. Continuing reform initiatives would further facilitate growth,” the statement said.

“On the external front, services exports are likely to remain strong, while merchandise exports face some headwinds. External uncertainties continue to pose downside risks to the outlook, while speedy conclusion of ongoing trade and investment negotiations present upside potential,” it noted.

Consumer price index (CPI)-based inflation for FY26 is now projected at 2 per cent, with Q3 at 0.6 per cent and Q4 at 2.9 per cent. CPI inflation for Q1 and Q2 FY27 are projected at 3.9 per cent and 4 per cent respectively.

ALCHEMPro News Desk (DS)