RBI’s Latest Monetary Policy Meet Highlights—Here’s All You Need To Know About GDP, Inflation And Other Key Forecasts

The Reserve Bank of India (RBI) announced its latest monetary policy decisions on Friday (6 December), with the Monetary Policy Committee (MPC) deciding to keep the policy repo rate unchanged at 6.50 per cent. Other key rates, such as the standing deposit facility (SDF) at 6.25 per cent and the marginal standing facility (MSF) and Bank Rate at 6.75 per cent, also remained steady.

Let's have a look over other key highlights of the meet:

GDP Growth Forecasts

The MPC revised its GDP growth forecast for Financial Year (FY)25, reducing it from 7.2 per cent to 6.6 per cent. For the third (Q3) and fourth quarters (Q4) of FY25, the growth projections were adjusted to 6.8 per cent and 7.2 per cent, down from the earlier forecast of 7.4 per cent for both quarters.

Looking ahead to FY26, the committee projected Q1 growth at 6.9 per cent and Q2 growth at 7.3 per cent, reflecting cautious optimism about medium-term economic prospects.

Neutral Policy Stance

The MPC decided to maintain a neutral policy stance, providing flexibility to respond to evolving economic and inflationary trends. This stance enables the committee to closely monitor developments to support sustainable economic growth while keeping inflation in check.

Cash Reserve Ratio

In an effort to stimulate economic activity, the RBI reduced the Cash Reserve Ratio (CRR) from 4.5 per cent to 4 per cent. This measure is expected to inject Rs 1.16 lakh crore into the banking system, enhancing banks' capacity to lend and supporting credit growth across sectors.

Inflation Projections 

The RBI revised FY25 inflation projections upward, setting the CPI target at 4.8 per cent from 4.5 per cent. Quarterly forecasts show Q3 inflation at 5.7 per cent (up from 4.8 per cent), Q4 at 4.5 per cent (from 4.2 per cent), and FY26 Q1 at 4.6 per cent (from 4.3 per cent).

Risk Highlights

The MPC identified geopolitical tensions, global commodity price volatility, and financial market fluctuations as major risks to inflation stability. However, the RBI remains optimistic about a gradual recovery, supported by robust agricultural output, steady industrial growth, and sustained economic activity.

Additional Measures

The RBI introduced several initiatives to modernize and strengthen the financial sector. Key measures include linking the FX-Retail platform with Bharat Connect, introducing the Secured Overnight Rupee Rate (SORR) as a new benchmark, and increasing collateral-free agricultural loan limits from Rs 1.6 lakh to Rs 2 lakh. Small Finance Banks can now offer pre-sanctioned credit lines via UPI.

The RBI also announced the launch of initiatives like MuleHunter.AI for detecting mule bank accounts, the "Connect 2 Regulate" framework for open regulation, and the establishment of a committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI). Additionally, a podcast facility will serve as a new communication medium. These steps aim to enhance transparency, innovation, and security in the financial ecosystem.

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