Summary of Monetary Policy Statement, 2024-25

Resolution of the Monetary Policy Committee (MPC)

The MPC held its 53rd meeting from 5-7 February 2025, chaired by Shri Sanjay Malhotra, Governor, Reserve Bank of India.

Other members present included Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Rajiv Ranjan, and Shri M. Rajeshwar Rao.

Monetary policy decisions

The policy repo rate was reduced by 25 basis points to 6.25% with immediate effect.

The standing deposit facility (SDF) rate was adjusted to 6.00%, while the marginal standing facility (MSF) rate and Bank Rate were set at 6.50%.

The committee will continue with a neutral monetary policy stance, prioritising inflation control while supporting growth.

These decisions align with the medium-term target of 4% consumer price index (CPI) inflation, within a ±2% band.

Growth and inflation outlook

Global economy: Growth remains below historical averages amid slow disinflation, geopolitical tensions, and policy uncertainties.

Domestic economy:

GDP growth for 2024-25 is estimated at 6.4% due to a recovery in private consumption.

The services and agriculture sectors are supporting growth, while industrial growth remains weak.

GDP growth for 2025-26 is projected at 6.7%, with quarterly estimates:

Q1: 6.7%

Q2: 7.0%

Q3: 6.5%

Q4: 6.5%

Inflation trends:

Headline inflation moderated from 6.2% in October 2024 to lower levels in November-December due to falling vegetable prices.

Core inflation remains low, while fuel prices remain in deflation.

CPI inflation for 2024-25 is projected at 4.8%, with Q4 at 4.4%.

CPI inflation for 2025-26 is expected to be 4.2%, assuming normal monsoons:

Q1: 4.5%

Q2: 4.0%

Q3: 3.8%

Q4: 4.2%

Rationale for monetary policy decisions

Inflation outlook is improving and is expected to gradually align with the 4% target.

Economic growth remains below last year's levels, creating room for policy support.

External risks (financial market volatility, trade uncertainties, and weather disruptions) necessitate continued vigilance.

The MPC will maintain a neutral stance to ensure flexibility in responding to economic changes.

Next steps

The minutes of the meeting will be published on 21 February 2025.

The next MPC meeting is scheduled for 7-9 April 2025.