RBI MPC Meeting Begins: Rate Cut Decision Expected Friday

The meeting comes at a time when the central bank has already undertaken significant monetary easing over the past year.

The Reserve Bank of India has reduced the key short-term lending rate, or the repo rate, by a cumulative 125 basis points since last February, reflecting its focus on supporting economic growth while keeping inflation under control.

During the current MPC meeting, members will hold detailed discussions over three days, carefully assessing both inflation trends and growth prospects of the Indian economy before arriving at a decision.

In the last MPC meeting, the RBI announced a 25-basis-point reduction in the policy repo rate, bringing it down to 5.25 per cent.

This decision was announced by Governor Sanjay Malhotra on December 5, following the conclusion of the three-day MPC meeting held from December 3 to 5. Alongside the rate cut, the central bank also revised its economic growth outlook.

According to the RBI's assessment at the previous meeting, the Indian economy is projected to grow at 7.3 per cent in the current fiscal year 2025-26, which is about half a percentage point higher than the earlier estimate.

This upward revision reflected improved confidence in domestic economic activity and overall growth momentum.

On the inflation front, the latest data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed that year-on-year inflation based on the Consumer Price Index (CPI) for December 2025 stood at 1.33 per cent (provisional) compared to December 2024.

The increase in inflation during the month was mainly attributed to higher prices in categories such as personal care and effects, vegetables, meat and fish, eggs, spices, pulses and products.

Headline inflation in December 2025 rose by 62 basis points compared to November 2025.

Despite this increase, inflation continued to remain below the RBI's medium-term target of 4 per cent for the 11th consecutive month, providing comfort to policymakers as they balance growth support with price stability.

The outcome of the ongoing MPC meeting will be closely watched by markets and observers, as it will indicate the RBI's next steps amid easing inflation and steady growth prospects.

- ANI