Mumbai: The Monetary Policy Committee (MPC) held its 58th meeting under the chairmanship of Sanjay Malhotra, Governor, Reserve Bank of India. The MPC members Dr. Nagesh Kumar, Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta, and Indranil Bhattacharyya also attended the meeting.
In India, real Gross Domestic Product (GDP) registered a six-quarter high growth of 8.2% in Q2:2025-26, underpinned by resilient domestic demand amidst global trade and policy uncertainties. On the supply side, real gross value added expanded by 8.1%, aided by buoyant industrial and services sectors. Economic activity during the first half of the financial year benefited from income tax and goods and services tax rationalisation, softer crude oil prices, front-loading of government capital expenditure, and facilitative monetary and financial conditions supported by benign inflation, RBI said in a press release.
After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to reduce the policy repo rate under the liquidity adjustment facility to 5.25%. Consequently, the standing deposit facility rate shall stand adjusted to 5% and the marginal standing facility rate and the Bank Rate to 5.50%. The MPC also decided to continue with the neutral stance.
The global economy is holding up better than expected, though the earlier frontloading of trade is showing signs of normalising. Uncertainty has eased somewhat following the end of the US government shutdown and progress on trade agreements, yet it remains elevated. Global inflation dynamics remain uneven, with inflation trending above target in most major advanced economies. The US dollar strengthened primarily on safe-haven demand while treasury yields remained range-bound. Equity markets remain volatile, driven by shifting views on the monetary policy outlook and concerns surrounding stretched valuations in tech stocks.
