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RBI Starts Crucial MPC Meet Amid Low Inflation and Global Uncertainty
The three-day meeting of the RBI's Monetary Policy Committee (MPC) has begun, and its decision will be announced on Friday. This meeting is taking place after the budget and amid new updates on the India-US trade agreement. Let's take a closer look.
The meeting of the Reserve Bank of India's Monetary Policy Committee (MPC), which will extend for three days, has commenced today. The results of the important meeting will be declared on Friday. This meeting is taking place at a time when the Reserve Bank of India has already relaxed its monetary policy over the past year and there are many uncertainties on the global and domestic fronts.
This is the first meeting of the MPC since the technology-driven budget announced by Finance Minister Nirmala Sitharaman on February 1. Moreover, the situation regarding the India-US trade agreement is still uncertain, as both governments have not revealed all the terms of the agreement.
Over the past year, the RBI has relaxed its monetary policy significantly to boost economic growth. Since February, the central bank has cut the repo rate by a total of 125 basis points. In the December MPC meeting, the repo rate was also reduced by 25 basis points to 5.25 percent. The RBI also revised its economic growth forecast.
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The central bank has projected India's economic growth rate for the current fiscal year to be 7.3 percent, an increase of about half a percentage point from the previous estimate.
On the inflation front, according to the latest data from the Ministry of Statistics and Program Implementation, Consumer Price Index (CPI)-based retail inflation stood at 1.33 percent (annualized) in December 2025. This increase in inflation compared to December 2024 was due to higher prices of personal care, vegetables, meat and fish, eggs, spices, pulses, and related products. Headline inflation increased by 62 basis points in December 2025 compared to November 2025.
Over the next three days, MPC members will discuss inflation trends and economic growth prospects in detail. Friday's decision will indicate the RBI's future course of action regarding interest rates and monetary policy, especially at a time when inflation remains relatively controlled and growth remains stable.
