FY2025-26 Monetary Policy Cycle: From Easing to Neutral: UPSC Current Affairs Story Arc

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GS-316 events · 2025-03-17 → 2026-02-10

In 2025, India witnessed a rare 'Double-Expansion' where the RBI slashed the Repo Rate to 5.50% while simultaneously cutting the Cash Reserve Ratio by 100 basis points, injecting a massive ₹2.5 lakh crore into the system to combat global tariff shocks.

Overview

The FY2025-26 Monetary Policy Cycle represents a strategic shift from a tight regime to a neutral stance, aimed at bolstering growth amidst cooling inflation and global trade volatility. Led by the Monetary Policy Committee (MPC), the cycle saw the repo rate tumble from above 6% to 5.25% in less than a year. While the first half of 2025 was defined by aggressive 'dovish' cuts to stimulate lending, the latter half was a masterclass in 'cautious holding' as the RBI navigated 25% US tariffs on Indian imports. This arc is essential for understanding how the RBI balances its primary goal of inflation targeting (4% +/- 2%) with the secondary objective of supporting GDP growth.

How This Story Evolved

Prediction of cuts (Mar '25) → Rate cut to 6% (Apr '25) → Rate cut to 5.5% (Jun '25) → Pause due to global uncertainty (Aug-Oct '25) → Rate cut to 5.25% (Dec '25) → Hold at 5.25% (Feb '26)

  1. 2025-03-17: RBI Rate Cut Prediction
    More details

    UPSC Angle: Not exam-relevant

    Key Facts:

    • RBI
    • Interest rate cut
    • April 2025
    • Retail inflation decline
    • 25-basis point cut
    • June 2025
  2. 2025-04-09: RBI Cuts Repo Rate to 6%, Projects 6.5% GDP Growth
    More details

    UPSC Angle: RBI cuts repo rate to 6%, projects 6.5% GDP growth.

    Key Facts:

    • Policy repo rate reduced by 25 basis points to 6%.
    • GDP growth for 2025–26 projected at 6.5%.
    • RBI's medium-term target for CPI inflation is 4% within a band of +/- 2%.
    • Standing deposit facility (SDF) rate adjusted to 5.75%.
    • Marginal standing facility (MSF) rate and Bank Rate adjusted to 6.25%.
    • RBI completes 90 years on April 1, 1935.
    • The Monetary Policy Committee (MPC) reduced the policy repo rate by 25 basis points to 6%.
    • Decision made in the 54th meeting, the first for financial year 2025-26.
    • GDP growth for 2025-26 projected at 6.5%.
    • RBI completes 90 years since its establishment on April 1, 1935.
    • RBI expected to cut repo rate by 25 bps.
    • US tariffs on Indian imports expected to reduce India's GDP growth by 20–40 basis points.
    • RBI previously cut the repo rate by 25 bps to 6.25% in February.
  3. 2025-06-04: RBI's Monetary Policy Committee Commences Deliberations
    More details

    UPSC Angle: RBI MPC meeting outcomes affect monetary policy and interest rates.

    Key Facts:

    • The Monetary Policy Committee (MPC) meeting is being held from June 4-6, 2025.
    • The meeting is chaired by Reserve Bank Governor Sanjay Malhotra.
    • A rate cut of 25-50 basis points is expected.
    • The decision will be announced on June 6, 2025.
  4. 2025-06-08: RBI Cuts Repo Rate to 5.50% to Boost Growth
    More details

    UPSC Angle: RBI cuts repo rate to 5.50% to boost growth.

    Key Facts:

    • RBI has cut its policy repo rate by 50 basis points (0.50%) to 5.5 %.
    • RBI maintained the growth rate forecast of 6.5 % for the Indian economy in 2025-26.
    • RBI has announced a staggered 1% cut in the cash reserve ratio (CRR) to 3%.
    • Since February 2025, the RBI has reduced the policy repo rates by 100 basis points or 1%.
    • MPC slashed the repo rate by 50 basis points to 5.50 per cent.
    • Central bank also cut the cash reserve ratio of banks by 100 basis points to 3 per cent.
    • Releasing Rs 2.5 lakh crore of lendable resources to the banking system.
    • MPC has changed its policy stance from 'accommodative' to 'neutral'.
    • RBI Monetary Policy Committee (MPC) slashed the repo rate by 50 basis points to 5.50%
    • Third consecutive reduction since February 2025
    • Cash reserve ratio of banks cut by 100 basis points to 3%
    • ₹2.5 lakh crore of lendable resources released to the banking system
    • RBI Governor: Sanjay Malhotra
    • Policy stance changed from 'accommodative' to 'neutral'
    • Growth estimate retained at 6.5%
    • Lower inflation projected at 3.7% in the current fiscal
    • CPI inflation for 2025-26 expected to be lower at 3.7%
    • Real GDP growth for 2025-26 projected at 6.5%
    • Policy repo rate reduced by 50 basis points to 5.50%
    • Standing Deposit Facility (SDF) rate adjusted to 5.25%
    • Marginal Standing Facility (MSF) rate and Bank Rate adjusted to 5.75%
    • RBI remains committed to provide sufficient liquidity to the banking system
    • 100 bps CRR reduction
    • MPC voted 5:1 to lower the policy Repo Rate by 50 bps to 5.50 per cent
    • RBI MPC is expected to cut rates for the third straight meeting
    • Repo rate expected to come down by another 25 basis points to 5.75%
    • SBI projected a repo rate cut of 50 basis points in its upcoming MPC meeting
    • Financial institutions have reduced the interest rates on savings accounts to 2.7%
    • Fixed deposit rates have also been cut by 30-70 basis points since February this year
  5. 2025-06-21: RBI Governor suggests monetary policy to support growth
    More details

    UPSC Angle: RBI Governor suggests monetary policy to support growth.

    Key Facts:

    • RBI Governor: Advocated for supportive monetary policy
    • Reason: Sharp decline in inflation
  6. 2025-06-23: Expansionary Policies in a Slowing Economy
    More details

    UPSC Angle: Expansionary fiscal and monetary policies in a slowing economy.

    Key Facts:

    • RBI Repo Rate: Cut twice in 2025
    • April 2025: Repo rate reduced by 25 bps
    • June 2025: Repo rate reduced by 50 bps
    • Current Policy Repo Rate: 5.5%
    • RBI projects GDP growth: 6.5%
    • Inflation target: 4% +/- 2%
    • Income tax cuts: Announced in February 2025
    • Unemployment: Increased from 5.1% in April to 5.6% in May
  7. 2025-08-07: RBI Maintains Repo Rate, Projects GDP Growth at 6.5%
    More details

    UPSC Angle: RBI maintains repo rate at 5.5%, projects GDP growth at 6.5%.

    Key Facts:

    • Repo rate held at 5.5%.
    • GDP growth maintained at 6.5%.
  8. 2025-08-08: RBI Pauses Rate Cuts Amid Global Uncertainty
    More details

    UPSC Angle: RBI pauses rate cuts after 100 bps reduction since February 2025.

    Key Facts:

    • RBI paused rate cuts on August 6, 2025.
    • RBI had reduced rates by 100 bps since February 2025.
    • RBI Governor: Sanjay Malhotra.
    • U.S. planned to impose an additional 25% tariff on Indian imports.
  9. 2025-09-02: RBI's Monetary Policy Stance
    More details

    UPSC Angle: RBI's MPC maintained key rates.

    Key Facts:

    • RBI Repo Rate: 5.50%
    • Standing Deposit Facility (SDF): 5.25%
    • Marginal Standing Facility (MSF): 5.75%
    • Growth forecast for 2025–26: 6.5%
    • Inflation forecast for 2025–26: Revised down to 3.1%
    • Projected inflation in Q1 of 2026–27: 4.9%
  10. 2025-10-27: RBI Keeps Repo Rate Unchanged at 5.50%
    More details

    UPSC Angle: RBI's decision to keep repo rate unchanged at 5.50%.

    Key Facts:

    • RBI repo rate: 5.50%
    • GDP growth forecast for FY2025/26: 6.8%
    • Earlier GDP growth forecast for FY2025/26: 6.5%
    • Q2 GDP growth forecast: 7.0%
    • Q3 GDP growth forecast: 6.4%
    • Q4 GDP growth forecast: 6.2%
  11. 2025-11-06: Monetary Policy Committee Discusses Economic Outlook
    More details

    UPSC Angle: Monetary Policy Committee discusses monetary policy actions.

    Key Facts:

    • Headline inflation was 3.8% in August and September 2025
    • Headline inflation expected to fall to close to 3% by early next year and gradually return to the 2% target
    • Annual private sector pay growth slowed to 4.4% in the three months to August
    • Number of vacancies has fallen, and employment growth has stalled
    • Bank rate has been cut five times
  12. 2025-11-20: RBI May Cut Rates if Inflation Remains Low
    More details

    UPSC Angle: Not exam-relevant

    Key Facts:

    • RBI may cut rates in December assessment
    • Consumer inflation expected between 1.8% and 2% for FY26
    • GDP expected to expand 6.8% to 7%
    • Rate cut could boost growth without impacting inflation
  13. 2025-12-05: RBI Cuts Policy Rate to 5.25% Amid Benign Inflation Outlook
    More details

    UPSC Angle: Not exam-relevant

    Key Facts:

    • RBI Governor: Sanjay Malhotra
    • Repo rate reduced by 25 bps to 5.25%
    • Standing deposit facility (SDF) rate: 5.00%
    • Marginal standing facility (MSF) rate and Bank rate: 5.50%
    • MPC voted 6-0 to lower the policy repo rate
    • Policy stance: Neutral
    • FY26 GDP growth estimate raised to 7.3% from 6.8%
    • FY26 CPI inflation forecast cut to 2% from 2.6%
    • OMO purchase of GSec worth ₹1 lakh crore in two tranches
    • USD reserves: $688 billion
    • Next MPC meeting: February 4 to 6, 2026
    • RBI's Monetary Policy Committee (MPC) reduced the policy repo rate to 5.25%.
    • Standing deposit facility (SDF) rate adjusted to 5.00%.
    • Marginal standing facility (MSF) rate and the Bank Rate to 5.50%.
    • RBI cut its forecast for inflation in the fiscal year ending March by 60 basis points to 2.0%.
    • RBI to conduct OMO purchases of government securities of ₹1 lakh crore and a three-year dollar rupee buy/sell swap of $5 billion in December.
    • Real GDP registered a six-quarter high growth of 8.2% in Q2:2025-26.
    • RBI announced a 25-basis-point cut in the policy repo rate, bringing it down to 5.25 per cent.
    • Indian economy is projected to grow at 7.3 per cent in the current fiscal year 2025-26.
    • Year-on-year inflation based on the Consumer Price Index (CPI) for December 2025 stood at 1.33 per cent.
  14. 2025-12-24: RBI's Policy Rate
    More details

    UPSC Angle: RBI reduced the policy rate to 5.25% to support consumption.

    Key Facts:

    • RBI
    • Policy rate: 5.25%
  15. 2026-02-07: RBI Maintains Repo Rate, Revises FY26 Growth & Inflation
    More details

    UPSC Angle: RBI maintains repo rate, revises FY26 growth & inflation.

    Key Facts:

    • Repo Rate: Unchanged at 5.25%
    • GDP Growth for FY26: Revised higher to 7.4% (from 7.3%)
    • Retail Inflation: Revised to 2.1% (from 2%)
    • CPI inflation is projected at 4–4.2% in Q1-Q2 FY27
    • FY26 GDP growth projection: Revised to 7.4% (from 7.3%)
    • Retail inflation projection: Revised to 2.1% (from 2%)
    • CPI inflation projection: 4-4.2% in Q1-Q2 FY27
    • Repo rate: 5.25%
    • SDF rate: 5.00%
    • MSF and Bank Rate: 5.50%
    • CRR: 0%
    • SLR: 18.0%
    • Fixed Reverse Repo: 3.35%
    • Real GDP growth for 2025-26: 7.4%
    • CPI Inflation projected for 2025-26: 2.1%
    • CPI inflation for Q1:2026-27: 4.0%
    • CPI inflation for Q2: 2026-27: 4.2%
    • Collateral-free loan limit for MSMEs enhanced from ₹10 lakh to ₹20 lakh
    • Banks are now allowed to lend to REITs
    • RBI to introduce derivatives on credit indices and total return swaps on corporate bonds
    • RBI proposes to remove the overall investment cap under the Voluntary Retention Route (VRR)
    • RBI to compensate customers up to ₹25,000 for loss incurred in small-value fraudulent transactions
  16. 2026-02-10: RBI Monetary Policy Committee Meeting
    More details

    UPSC Angle: RBI Monetary Policy Committee meeting decisions.

    Key Facts:

    • RBI's Monetary Policy Committee concluded its February 2026 meeting.
    • Governor Shaktikanta Das announced key decisions on repo rate and monetary stance.

Genesis

Trigger

The cycle was triggered on March 17, 2025, when a sharp decline in retail inflation led economists to predict an imminent pivot from the RBI's previous hawkish stance.

Why Now

The transition was enabled by retail inflation trending toward the 3-4% range, providing the MPC with the 'inflationary space' to prioritize a projected 6.5% GDP growth rate.

Historical Context

This follows the post-pandemic recovery era where rates were high to curb inflation; the 2025 shift mimics the early 2019 easing cycle but with a more significant focus on global supply-chain protectionism.

Key Turning Points

  1. [2025-06-08] Aggressive 50bps Repo Cut + 100bps CRR Cut

    It signaled a shift to an 'Expansionary' phase to provide massive liquidity for credit growth.

    Before: Cautious 25bps cuts. After: Multi-instrumental easing using both price (Repo) and quantity (CRR) tools.

  2. [2025-08-08] Strategic Pause due to US Tariffs

    The RBI halted its easing cycle despite low domestic inflation to shield against global volatility.

    Before: Expected continuous cuts. After: A period of 'wait and watch' lasting until December.

Key Actors and Institutions

NameRoleRelevance
Sanjay MalhotraGovernor, Reserve Bank of India (2025)Chaired the MPC during the aggressive 100bps easing phase and the critical decision to cut CRR to 3% in June 2025.
Shaktikanta DasGovernor, Reserve Bank of India (2026)Concluded the February 2026 meeting, overseeing the revision of FY26 GDP growth projections upward to 7.4%.

Key Institutions

  • Monetary Policy Committee (MPC)
  • Reserve Bank of India (RBI)
  • National Statistical Office (NSO)

Key Concepts

Repo Rate

The interest rate at which the RBI lends money to commercial banks against government securities. It is the primary tool for controlling inflation and stimulating growth.

Current Fact: The Repo Rate was reduced to 5.25% in December 2025 to support consumption and credit growth.

Cash Reserve Ratio (CRR)

The share of total deposits that commercial banks must keep as liquid cash with the RBI, which does not earn any interest.

Current Fact: In June 2025, the RBI announced a staggered 100 bps cut in the CRR to 3%, releasing ₹2.5 lakh crore into the banking system.

Neutral Stance

A policy stance where the central bank is neither inclined to raise nor lower interest rates, allowing flexibility based on incoming data.

Current Fact: The MPC retained a 'neutral' policy stance in February 2026 to respond to evolving domestic and global conditions.

Inflation Targeting

A framework where the central bank uses monetary tools to keep inflation within a specific range, currently 4% with a band of +/- 2% in India.

Current Fact: Retail inflation for FY26 was revised to 2.1% in the February 2026 meeting, well within the target band.

What Happens Next

Current Status

As of February 10, 2026, the RBI has held the Repo Rate steady at 5.25% with a 'neutral' stance.

Likely Next

Upcoming meetings are expected to focus on 'calibrated flexibility,' potentially shifting back to an accommodative stance if global trade wars cool down or if the 7.4% GDP growth target faces headwinds.

Wildcards

The 25% tariff plan by the US on Indian imports remains the biggest wildcard, capable of causing imported inflation and forcing the RBI to reverse its easing cycle.

Why UPSC Cares

Syllabus Topics

  • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
  • Monetary Policy and its instruments

Essay Angles

  • The delicate balance between inflation targeting and economic growth.
  • Global trade wars and the sovereignty of domestic monetary policy.

Prelims Likely: Yes

Mains Likely: Yes

Trend Signal: perennial

Exam Intelligence

Previous Year Question Connections

  • Identify actions RBI would NOT do for an expansionist policy. — This arc showcases the 'expansionary' phase (cutting Repo and CRR) mentioned in the 2020 question.
  • Composition and functions of the Monetary Policy Committee (MPC). — The arc details the MPC's decision-making process, chaired by the Governor, as tested in 2017.
  • Standing Deposit Facility (SDF) as the floor of the LAF corridor. — The arc explicitly mentions the SDF being adjusted to 5.75% in April and 5.00% in December 2025.

Prelims Angles

  • Fact: The June 2025 CRR cut was 100 bps (1%), bringing it to 3%.
  • Fact: The MPC consists of 6 members, 3 from RBI and 3 nominated by the Govt.
  • Fact: The repo rate reached its floor in this cycle at 5.25% in December 2025.
  • Fact: The primary indicator for RBI's inflation targeting is CPI (Consumer Price Index) - Combined.

Mains Preparation

Sample Question: Critically analyze the Reserve Bank of India's shift from an accommodative to a neutral stance during FY 2025-26. To what extent can monetary policy insulate the domestic economy from global trade uncertainties such as unilateral tariffs?

Answer Structure: Intro: Define the 2025 monetary cycle (easing to neutral). Body 1: Discuss the rationale for the 100bps cut and CRR reduction (Liquidity injection, growth stimulus). Body 2: Analyze the role of global factors (US tariffs) in causing the August-October pause. Body 3: Explain the significance of the 'Neutral' stance in February 2026. Conclusion: Emphasize the need for policy coordination between fiscal and monetary authorities.

Essay Topic: Monetary Policy: A Shield or a Sword in an Interconnected Global Economy?

Textbook Connections

Indian Economy, Nitin Singhania (2nd ed.) > Chapter 7: Money and Banking > p. 172

Provides the statutory basis for the MPC under the RBI Act, 1934.

Gap: The textbook explains the 4% +/- 2% target, while this arc shows the RBI operating with inflation as low as 1.8-2% (Dec 2025).

Indian Economy, Vivek Singh (7th ed.) > Chapter 2: Money and Banking- Part I > p. 64

Defines expansionary policy as 'Dovish' or 'Accommodative'.

Gap: While the textbook treats Repo and CRR separately, this arc demonstrates their simultaneous use as a 'Double-Expansion' strategy.

Quick Revision

  • April 2025: Repo cut by 25 bps to 6.00%; GDP growth projected at 6.5%.
  • June 2025: Repo cut by 50 bps to 5.50%; CRR cut by 100 bps to 3%.
  • Liquidity Impact: CRR cut released ₹2.5 lakh crore into the system.
  • August 2025: Policy pause at 5.50% due to 25% US tariff threat.
  • December 2025: Final cut of 25 bps to 5.25%; inflation outlook benign at 2.0%.
  • February 2026: Repo held at 5.25%; GDP growth revised upward to 7.4%.
  • The SDF rate in Dec 2025 was set at 5.00%, while MSF/Bank Rate was 5.50%.

Key Takeaway

The FY26 cycle proves that the RBI uses inflation as a 'permission slip' to aggressively support growth, but global trade risks act as the ultimate 'speed breaker' in the easing process.

All Events in This Story (16 items)

  1. 2025-03-17 [Economy] — RBI Rate Cut Prediction
    Economists are predicting a potential interest rate cut by the Reserve Bank of India (RBI) in April 2025, due to a decline in retail inflation. An Economic Times poll indicates that most economists expect a 25-basis point cut, with some forecasting another cut in June.
    More details

    UPSC Angle: Not exam-relevant

    Key Facts:

    • RBI
    • Interest rate cut
    • April 2025
    • Retail inflation decline
    • 25-basis point cut
    • June 2025
  2. 2025-04-09 [Economy] — RBI Cuts Repo Rate to 6%, Projects 6.5% GDP Growth
    The Monetary Policy Committee (MPC) reduced the policy repo rate by 25 basis points to 6% with immediate effect in its first meeting for the financial year 2025-26. The repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks, and the cut is aimed at boosting lending and investment, with GDP growth for 2025-26 projected at 6.5%. The decision was made amidst uncertain global economic conditions, with some relief from easing inflation.
    More details

    UPSC Angle: RBI cuts repo rate to 6%, projects 6.5% GDP growth.

    Key Facts:

    • Policy repo rate reduced by 25 basis points to 6%.
    • GDP growth for 2025–26 projected at 6.5%.
    • RBI's medium-term target for CPI inflation is 4% within a band of +/- 2%.
    • Standing deposit facility (SDF) rate adjusted to 5.75%.
    • Marginal standing facility (MSF) rate and Bank Rate adjusted to 6.25%.
    • RBI completes 90 years on April 1, 1935.
    • The Monetary Policy Committee (MPC) reduced the policy repo rate by 25 basis points to 6%.
    • Decision made in the 54th meeting, the first for financial year 2025-26.
    • GDP growth for 2025-26 projected at 6.5%.
    • RBI completes 90 years since its establishment on April 1, 1935.
    • RBI expected to cut repo rate by 25 bps.
    • US tariffs on Indian imports expected to reduce India's GDP growth by 20–40 basis points.
    • RBI previously cut the repo rate by 25 bps to 6.25% in February.
  3. 2025-06-04 [Economy] — RBI's Monetary Policy Committee Commences Deliberations
    The Reserve Bank of India's Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, has begun its three-day meeting to decide on monetary policy. Expectations are high for a rate cut, potentially 25 to 50 basis points, to stimulate economic growth amid global uncertainties. The decision will be announced on June 6, 2025.
    More details

    UPSC Angle: RBI MPC meeting outcomes affect monetary policy and interest rates.

    Key Facts:

    • The Monetary Policy Committee (MPC) meeting is being held from June 4-6, 2025.
    • The meeting is chaired by Reserve Bank Governor Sanjay Malhotra.
    • A rate cut of 25-50 basis points is expected.
    • The decision will be announced on June 6, 2025.
  4. 2025-06-08 [Economy] — RBI Cuts Repo Rate to 5.50% to Boost Growth
    The Reserve Bank of India's Monetary Policy Committee (MPC) reduced the repo rate by 50 basis points to 5.50% in June 2025, the third consecutive reduction since February 2025, to stimulate economic growth. The central bank also decreased the cash reserve ratio for banks by 100 basis points to 3%, releasing ₹2.5 lakh crore to the banking system.
    More details

    UPSC Angle: RBI cuts repo rate to 5.50% to boost growth.

    Key Facts:

    • RBI has cut its policy repo rate by 50 basis points (0.50%) to 5.5 %.
    • RBI maintained the growth rate forecast of 6.5 % for the Indian economy in 2025-26.
    • RBI has announced a staggered 1% cut in the cash reserve ratio (CRR) to 3%.
    • Since February 2025, the RBI has reduced the policy repo rates by 100 basis points or 1%.
    • MPC slashed the repo rate by 50 basis points to 5.50 per cent.
    • Central bank also cut the cash reserve ratio of banks by 100 basis points to 3 per cent.
    • Releasing Rs 2.5 lakh crore of lendable resources to the banking system.
    • MPC has changed its policy stance from 'accommodative' to 'neutral'.
    • RBI Monetary Policy Committee (MPC) slashed the repo rate by 50 basis points to 5.50%
    • Third consecutive reduction since February 2025
    • Cash reserve ratio of banks cut by 100 basis points to 3%
    • ₹2.5 lakh crore of lendable resources released to the banking system
    • RBI Governor: Sanjay Malhotra
    • Policy stance changed from 'accommodative' to 'neutral'
    • Growth estimate retained at 6.5%
    • Lower inflation projected at 3.7% in the current fiscal
    • CPI inflation for 2025-26 expected to be lower at 3.7%
    • Real GDP growth for 2025-26 projected at 6.5%
    • Policy repo rate reduced by 50 basis points to 5.50%
    • Standing Deposit Facility (SDF) rate adjusted to 5.25%
    • Marginal Standing Facility (MSF) rate and Bank Rate adjusted to 5.75%
    • RBI remains committed to provide sufficient liquidity to the banking system
    • 100 bps CRR reduction
    • MPC voted 5:1 to lower the policy Repo Rate by 50 bps to 5.50 per cent
    • RBI MPC is expected to cut rates for the third straight meeting
    • Repo rate expected to come down by another 25 basis points to 5.75%
    • SBI projected a repo rate cut of 50 basis points in its upcoming MPC meeting
    • Financial institutions have reduced the interest rates on savings accounts to 2.7%
    • Fixed deposit rates have also been cut by 30-70 basis points since February this year
  5. 2025-06-21 [Economy] — RBI Governor suggests monetary policy to support growth
    The RBI Governor suggested that monetary policy needs to support growth, especially with the sharp decline in inflation.
    More details

    UPSC Angle: RBI Governor suggests monetary policy to support growth.

    Key Facts:

    • RBI Governor: Advocated for supportive monetary policy
    • Reason: Sharp decline in inflation
  6. 2025-06-23 [Economy] — Expansionary Policies in a Slowing Economy
    India is currently experiencing a rare phase where both fiscal and monetary policies are expansionary, with the RBI cutting the repo rate twice in 2025, reducing it by 25 bps in April and 50 bps in June, bringing the current policy repo rate to 5.5%. Expansionary fiscal policies, such as tax cuts and increased public spending, aim to boost aggregate demand and support employment. However, concerns exist regarding macroeconomic coordination and potential inflationary pressures.
    More details

    UPSC Angle: Expansionary fiscal and monetary policies in a slowing economy.

    Key Facts:

    • RBI Repo Rate: Cut twice in 2025
    • April 2025: Repo rate reduced by 25 bps
    • June 2025: Repo rate reduced by 50 bps
    • Current Policy Repo Rate: 5.5%
    • RBI projects GDP growth: 6.5%
    • Inflation target: 4% +/- 2%
    • Income tax cuts: Announced in February 2025
    • Unemployment: Increased from 5.1% in April to 5.6% in May
  7. 2025-08-07 [Economy] — RBI Maintains Repo Rate, Projects GDP Growth at 6.5%
    The Monetary Policy Committee (MPC) held the repo rate at 5.5% and maintained GDP growth projection at 6.5%.
    More details

    UPSC Angle: RBI maintains repo rate at 5.5%, projects GDP growth at 6.5%.

    Key Facts:

    • Repo rate held at 5.5%.
    • GDP growth maintained at 6.5%.
  8. 2025-08-08 [Economy] — RBI Pauses Rate Cuts Amid Global Uncertainty
    The Reserve Bank of India's (RBI) Monetary Policy Committee decided to pause rate cuts after a total reduction of 100 basis points (bps) since February 2025, citing uncertainty in global trade and evolving tariff situations. RBI Governor Sanjay Malhotra highlighted these factors as key reasons for the cautious approach, especially with the U.S. planning to impose an additional 25% tariff on Indian imports.
    More details

    UPSC Angle: RBI pauses rate cuts after 100 bps reduction since February 2025.

    Key Facts:

    • RBI paused rate cuts on August 6, 2025.
    • RBI had reduced rates by 100 bps since February 2025.
    • RBI Governor: Sanjay Malhotra.
    • U.S. planned to impose an additional 25% tariff on Indian imports.
  9. 2025-09-02 [Economy] — RBI's Monetary Policy Stance
    The RBI's Monetary Policy Committee (MPC) maintained key rates, keeping the Repo Rate at 5.50%, the Standing Deposit Facility (SDF) at 5.25%, and the Marginal Standing Facility (MSF) at 5.75%. Despite this, the RBI adopted a hawkish stance on inflation, revising the inflation forecast down to 3.1% for 2025–26 but projecting it to rise to 4.9% in Q1 of 2026–27.
    More details

    UPSC Angle: RBI's MPC maintained key rates.

    Key Facts:

    • RBI Repo Rate: 5.50%
    • Standing Deposit Facility (SDF): 5.25%
    • Marginal Standing Facility (MSF): 5.75%
    • Growth forecast for 2025–26: 6.5%
    • Inflation forecast for 2025–26: Revised down to 3.1%
    • Projected inflation in Q1 of 2026–27: 4.9%
  10. 2025-10-27 [Economy] — RBI Keeps Repo Rate Unchanged at 5.50%
    The Reserve Bank of India (RBI) kept its key repo rate unchanged at 5.50% during its October 2025 meeting, in line with market expectations. The decision comes amid easing inflation, as the central bank assesses the impact of earlier rate cuts and recent tax reductions, against a backdrop of global trade uncertainties.
    More details

    UPSC Angle: RBI's decision to keep repo rate unchanged at 5.50%.

    Key Facts:

    • RBI repo rate: 5.50%
    • GDP growth forecast for FY2025/26: 6.8%
    • Earlier GDP growth forecast for FY2025/26: 6.5%
    • Q2 GDP growth forecast: 7.0%
    • Q3 GDP growth forecast: 6.4%
    • Q4 GDP growth forecast: 6.2%
  11. 2025-11-06 [Economy] — Monetary Policy Committee Discusses Economic Outlook
    The Monetary Policy Committee (MPC) convened in November 2025 to discuss monetary policy actions, considering factors such as inflation, economic growth, and labor market conditions. The MPC noted that underlying price and wage pressures are easing, and headline inflation is expected to fall to around 3% by early next year. However, risks to disinflation remain, requiring a cautious approach to further bank rate cuts.
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    UPSC Angle: Monetary Policy Committee discusses monetary policy actions.

    Key Facts:

    • Headline inflation was 3.8% in August and September 2025
    • Headline inflation expected to fall to close to 3% by early next year and gradually return to the 2% target
    • Annual private sector pay growth slowed to 4.4% in the three months to August
    • Number of vacancies has fallen, and employment growth has stalled
    • Bank rate has been cut five times
  12. 2025-11-20 [Economy] — RBI May Cut Rates if Inflation Remains Low
    With consumer inflation expected to be between 1.8% and 2% for fiscal year 2026 and GDP expected to expand 6.8% to 7%, economists suggest the Reserve Bank of India (RBI) may consider reducing policy rates in its upcoming December assessment. A rate cut could potentially boost economic growth without significantly impacting inflation.
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    UPSC Angle: Not exam-relevant

    Key Facts:

    • RBI may cut rates in December assessment
    • Consumer inflation expected between 1.8% and 2% for FY26
    • GDP expected to expand 6.8% to 7%
    • Rate cut could boost growth without impacting inflation
  13. 2025-12-05 [Economy] — RBI Cuts Policy Rate to 5.25% Amid Benign Inflation Outlook
    The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) unanimously voted to reduce the policy repo rate to 5.25%. This decision was driven by a benign inflation outlook, with the central bank forecasting inflation at 2.0% for the fiscal year ending in March. The MPC decided to maintain a neutral stance, signaling that further rate cuts are unlikely in the near future.
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    UPSC Angle: Not exam-relevant

    Key Facts:

    • RBI Governor: Sanjay Malhotra
    • Repo rate reduced by 25 bps to 5.25%
    • Standing deposit facility (SDF) rate: 5.00%
    • Marginal standing facility (MSF) rate and Bank rate: 5.50%
    • MPC voted 6-0 to lower the policy repo rate
    • Policy stance: Neutral
    • FY26 GDP growth estimate raised to 7.3% from 6.8%
    • FY26 CPI inflation forecast cut to 2% from 2.6%
    • OMO purchase of GSec worth ₹1 lakh crore in two tranches
    • USD reserves: $688 billion
    • Next MPC meeting: February 4 to 6, 2026
    • RBI's Monetary Policy Committee (MPC) reduced the policy repo rate to 5.25%.
    • Standing deposit facility (SDF) rate adjusted to 5.00%.
    • Marginal standing facility (MSF) rate and the Bank Rate to 5.50%.
    • RBI cut its forecast for inflation in the fiscal year ending March by 60 basis points to 2.0%.
    • RBI to conduct OMO purchases of government securities of ₹1 lakh crore and a three-year dollar rupee buy/sell swap of $5 billion in December.
    • Real GDP registered a six-quarter high growth of 8.2% in Q2:2025-26.
    • RBI announced a 25-basis-point cut in the policy repo rate, bringing it down to 5.25 per cent.
    • Indian economy is projected to grow at 7.3 per cent in the current fiscal year 2025-26.
    • Year-on-year inflation based on the Consumer Price Index (CPI) for December 2025 stood at 1.33 per cent.
  14. 2025-12-24 [Economy] — RBI's Policy Rate
    The Reserve Bank of India (RBI) reduced the policy rate to 5.25% to support consumption and credit growth, as inflation remained benign.
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    UPSC Angle: RBI reduced the policy rate to 5.25% to support consumption.

    Key Facts:

    • RBI
    • Policy rate: 5.25%
  15. 2026-02-07 [Economy] — RBI Maintains Repo Rate, Revises FY26 Growth & Inflation
    The Reserve Bank of India's Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 5.25%. Simultaneously, the MPC revised the GDP growth forecast for FY26 slightly upwards to 7.4% (from 7.3%) and retail inflation to 2.1% (from 2%). The MPC retained a neutral policy stance, signaling flexibility to respond to evolving domestic and global conditions.
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    UPSC Angle: RBI maintains repo rate, revises FY26 growth & inflation.

    Key Facts:

    • Repo Rate: Unchanged at 5.25%
    • GDP Growth for FY26: Revised higher to 7.4% (from 7.3%)
    • Retail Inflation: Revised to 2.1% (from 2%)
    • CPI inflation is projected at 4–4.2% in Q1-Q2 FY27
    • FY26 GDP growth projection: Revised to 7.4% (from 7.3%)
    • Retail inflation projection: Revised to 2.1% (from 2%)
    • CPI inflation projection: 4-4.2% in Q1-Q2 FY27
    • Repo rate: 5.25%
    • SDF rate: 5.00%
    • MSF and Bank Rate: 5.50%
    • CRR: 0%
    • SLR: 18.0%
    • Fixed Reverse Repo: 3.35%
    • Real GDP growth for 2025-26: 7.4%
    • CPI Inflation projected for 2025-26: 2.1%
    • CPI inflation for Q1:2026-27: 4.0%
    • CPI inflation for Q2: 2026-27: 4.2%
    • Collateral-free loan limit for MSMEs enhanced from ₹10 lakh to ₹20 lakh
    • Banks are now allowed to lend to REITs
    • RBI to introduce derivatives on credit indices and total return swaps on corporate bonds
    • RBI proposes to remove the overall investment cap under the Voluntary Retention Route (VRR)
    • RBI to compensate customers up to ₹25,000 for loss incurred in small-value fraudulent transactions
  16. 2026-02-10 [Economy] — RBI Monetary Policy Committee Meeting
    The Reserve Bank of India's Monetary Policy Committee concluded its February 2026 meeting, with Governor Shaktikanta Das announcing key decisions on repo rate and monetary stance.
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    UPSC Angle: RBI Monetary Policy Committee meeting decisions.

    Key Facts:

    • RBI's Monetary Policy Committee concluded its February 2026 meeting.
    • Governor Shaktikanta Das announced key decisions on repo rate and monetary stance.

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