Indian central bank’s monetary policy committee cuts inflation outlook, retains GDP growth forecast: RBI Governor Sanjay Malhotra

Indian central bank’s monetary policy committee cuts inflation outlook, retains GDP growth forecast: RBI Governor Sanjay Malhotra

Indian central bank’s monetary policy committee cuts inflation outlook, retains GDP growth forecast: RBI Governor Sanjay Malhotra

The monetary policy committee of India’s central bank decided on a 50 basis point cut in policy rate to 5.5 per cent, RBI Governor Sanjay Malhotra announced on Friday morning. Ahead of the MPC decision, Indian equities traded in the red but recovered shortly after the announcement.

Indian benchmark equity indices had declined in early Friday trade ahead of the RBI monetary policy outcome, with the BSE Sensex falling more than 159 points to 81,282.11 and the NSE Nifty shedding over 27 points to 24,723.25.

RBI Governor Malhotra announcing a 50bps repo rate cut, double that of the expected 25bps cut, triggered a recovery run, bringing the equities on level ground.

Apart from the key policy rate reduction, the MPC also announced a revision in the inflation outlook. The RBI now sees India’s inflation for FY 2026 at 3.7 per cent, lower than the earlier estimate of 4 per cent. India’s apex bank, however, retained the GDP growth forecast for the current fiscal year at 6.5 per cent but stated that geopolitical tensions and extreme weather could pose headwinds.

Malhotra stated that the MPC would now assess income data and chart out future policy accordingly.

The RBI Governor also stated that India’s forex reserves were at $691.5 billion, noting that it was “sufficient” to service import needs for more than 11 months.

[This story is being updated]

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