प्रेस प्रकाशनी PRESS RELEASE
संचार ि वभाग, कें द्रीय कायार्लय, शहीद
भगत ि संह मागर् , फोटर् , मंबई - 400
भारतीय रज़वर् बैंक 001
RESERVE BANK OF INDIA
वेबसाइट
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Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
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February 07, 2025
Monetary Policy Statement, 2024-25
Resolution of the Monetary Policy Committee February
5 to 7, 2025
Monetary Policy Decisions
The Monetary Policy Committee (MPC) held its 53rd meeting from February 5 to 7,
2025 under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of
India. The MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram
Singh, Dr. Rajiv Ranjan, and Shri M. Rajeshwar Rao attended the meeting. After
assessing the current and evolving macroeconomic situation, the MPC unanimously
decided to:
• reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25
basis points to 6.25 per cent with immediate effect; consequently, the standing
deposit facility (SDF) rate shall stand adjusted to 6.00 per cent and the marginal
standing facility (MSF) rate and the Bank Rate to 6.50 per cent;
• continue with the neutral monetary policy stance and remain unambiguously
focussed on a durable alignment of inflation with the target, while supporting
growth.
These decisions are in consonance with the objective of achieving the mediumterm
target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per
cent, while supporting growth.
Growth and Inflation Outlook
2. The global economy is growing below the historical average even though high
frequency indicators suggest resilience amidst continued expansion in world trade.
The world economic landscape remains challenging with slower pace of disinflation,
lingering geopolitical tensions and policy uncertainties. The strong dollar, inter alia,
continues to strain emerging market currencies and enhance volatility in financial
markets.
1
3. On the domestic front, as per the First Advance Estimates (FAE), real gross
domestic product (GDP) is estimated to grow at 6.4 per cent (y-o-y) in 2024-25
supported by a recovery in private consumption. On the supply side, growth is
supported by the services sector and a recovery in agriculture sector, while tepid
industrial growth is a drag.
4. Looking ahead, healthy rabi prospects and an expected recovery in industrial
activity should support economic growth in 2025-26. Among the key drivers on the
demand side, household consumption is expected to remain robust aided by the tax
relief in the Union Budget 2025-26. Fixed investment is expected to recover, supported
by higher capacity utilisation levels, healthy balance sheets of financial institutions and
corporates, and Government’s continued emphasis on capital expenditure. This is
corroborated by positive business sentiments highlighted in the Reserve Bank’s
enterprise surveys and PMIs. Resilient services exports will continue to support
growth. However, headwinds from geo-political tensions, protectionist trade policies,
volatility in international commodity prices and financial market uncertainties, continue
to pose downside risks to the outlook. Taking all these factors into consideration, real
GDP growth for 2025-26 is projected at 6.7 per cent with Q1 at 6.7 per cent; Q2 at 7.0
per cent; and Q3 and Q4 at 6.5 per cent each (Chart 1). The risks are evenly balanced.
5. Headline inflation softened sequentially in November-December 2024 from its
recent peak of 6.2 per cent in October. The moderation in food inflation, as vegetable
price inflation came off from its October high, drove the decline in headline inflation.
Core inflation remained subdued across goods and services components and the fuel
group continued to be in deflation.
6. Going ahead, food inflation pressures, absent any supply side shock, should
see a significant softening due to good kharif production, winter-easing in vegetable
prices and favourable rabi crop prospects. Core inflation is expected to rise but remain
moderate. Continued uncertainty in global financial markets coupled with volatility in
energy prices and adverse weather events presents upside risks to the inflation
trajectory. Taking all these factors into consideration, CPI inflation for 2024-25 is
projected at 4.8 per cent with Q4 at 4.4 per cent. Assuming a normal monsoon next
year, CPI inflation for 2025-26 is projected at 4.2 per cent with Q1 at 4.5 per cent; Q2
at 4.0 per cent; Q3 at 3.8 per cent; and Q4 at 4.2 per cent (Chart 2). The risks are
evenly balanced.
2
Rationale for Monetary Policy Decisions
7. The MPC noted that inflation has declined. Supported by a favourable outlook
on food and continuing transmission of past monetary policy actions, it is
expected to further moderate in 2025-26, gradually aligning with the target. The
MPC also noted that though growth is expected to recover from the low of
Q2:2024-25, it is much below that of last year. These growth-inflation dynamics
open up policy space for the MPC to support growth, while remaining focussed
on aligning inflation with the target. Accordingly, the MPC unanimously voted to
reduce the policy repo rate by 25 basis points to 6.25 per cent.
8. At the same time, excessive volatility in global financial markets and continued
uncertainties about global trade policies coupled with adverse weather events
pose risks to the growth and inflation outlook. This calls for the MPC to remain
watchful. Accordingly, the MPC unanimously voted to continue with a neutral
stance. This will provide MPC the flexibility to respond to the evolving
macroeconomic environment.
9. The minutes of the MPC’s meeting will be published on February 21, 2025.
10. The next meeting of the MPC is scheduled during April 7 to 9, 2025.
(Puneet Pancholy)
Press Release: 2024-2025/2094 Chief General Manager
