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📊 RBI Monetary Policy Committee Satement – October 1, 2025

By October 1, 2025No Comments

📊 RBI Monetary Policy Committee (MPC) Resolution – October 1, 2025

The 57th meeting of the Monetary Policy Committee (MPC), chaired by RBI Governor Shri Sanjay Malhotra, concluded on October 1, 2025. Here are the key takeaways and market impacts from the policy statement for 2025-26.

🔑 Key Decisions

  • Repo Rate: Unchanged at 5.50% under the LAF.

  • Standing Deposit Facility (SDF): Maintained at 5.25%.

  • Marginal Standing Facility (MSF) & Bank Rate: Unchanged at 5.75%.

  • Policy Stance: Neutral (two members preferred a shift to accommodative).

  • Next MPC Meeting: Scheduled for December 3–5, 2025.

📈 Growth Outlook

  • Q1 FY2025-26 GDP: Strong at 7.8%, led by consumption & fixed investment.

  • GVA Growth: 7.6%, supported by a revival in manufacturing and services.

  • Rural Demand: Strong on back of good monsoon & robust agriculture.

  • Urban Demand: Showing gradual recovery.

  • FY2025-26 GDP Projection: Revised upward to 6.8%.

    • Q2: 7.0%

    • Q3: 6.4%

    • Q4: 6.2%

  • Q1 2026-27: Projected at 6.4%.

⚠️ Risks: Tariff uncertainties, weak global demand, and geopolitical tensions could weigh on external trade.

📉 Inflation Outlook

  • Headline CPI: Fell to 1.6% in July 2025 (8-year low) before edging up to 2.1% in August.

  • Core Inflation: Contained at 4.2% (3.0% excluding precious metals).

  • Food Inflation: Eased sharply due to good harvests & buffer stocks.

  • GST Rate Cuts: Expected to further lower consumer prices.

  • FY2025-26 CPI Projection: 2.6% (down from 3.7% earlier).

    • Q2: 1.8%

    • Q3: 1.8%

    • Q4: 4.0% (base effect risk)

  • Q1 2026-27: Projected at 4.5%.

🏦 Rationale Behind Decision

  • Inflation outlook has moderated significantly; average inflation projected well below target range for most of the year.

  • Domestic growth is resilient but still vulnerable to global uncertainties and tariff headwinds.

  • GST reforms and improved demand outlook provide support to growth.

  • MPC chose to pause and watch the impact of earlier rate actions & fiscal measures before taking further steps.

📊 Market & Economic Impact

  • Bond Market: Stability expected; no immediate pressure from rate hikes.

  • Equity Market: Supportive for consumption & rate-sensitive sectors (banks, autos, housing).

  • Currency (INR): Neutral-to-positive as lower inflation strengthens RBI’s credibility, though external trade pressures remain.

  • Gold & Commodities: Softer domestic inflation reduces hedge demand; but global tariff/geopolitical risks keep bullion attractive.

  • Banking & Liquidity: Neutral stance ensures sufficient liquidity; encourages lending & investment.

✅ Summary:
RBI has struck a balanced tone – keeping rates unchanged at 5.5%, lowering inflation outlook, and projecting strong domestic growth despite global uncertainties. The stance allows policy flexibility if conditions worsen, while giving markets confidence that inflation is under control.

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By
Tradeline Capital
www.tradelinecapital.in

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