RBI retains India's GDP growth forecast for current fiscal at 6.5% amid geopolitical tensions

Governor Sanjay Malhotra made the prediction while announcing the RBI's bimonthly monetary policy after three days of MPC deliberations.

Updated on: Jun 6, 2025, 10:56:04 IST

By HT News Desk

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RBI Governor Sanjay Malhotra on Friday estimated the country's real GDP growth at 6.5 per cent for the fiscal year 2025-26.

Reserve Bank of India (RBI) Governor Sanjay Malhotra makes a statement on RBI Monetary Policy. (ANI )

Malhotra made the prediction while announcing the RBI's bimonthly monetary policy after three days of Monetary Policy Committee (MPC) deliberations. This means that the central bank has retained its earlier forecast for the growth in the country's GDP.

"Real GDP growth rate for this year, 2025-2026, is projected at 6.5 per cent, continuing with our earlier forecast, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.4 per cent. The risks are evenly balanced," Malhotra said.

The RBI lowered the inflation projection to 3.7 per cent from the earlier estimate of 4 per cent. The lowering was supported by expectations of a good monsoon.

RBI cuts repo rate again

The RBI cut the repo rate by 50 basis points on Friday, a higher-than-expected move to prop up growth, which has slowed to a four-year low of 6.5 per cent in FY25.

Following the rate cut, the key policy rate eased to a three-year low of 5.5 per cent, providing relief to home, auto and corporate loan borrowers. This is the lowest repo rate in three years.

The repo rate is the rate at which banks borrow funds from the RBI. The last time it stood below the current level was at 5.40 per cent on August 5, 2022.

RBI Governor Sanjay Malhotra said that after a detailed assessment of the evolving macroeconomic and financial development and the economic outlook, the MPC decided to reduce the repo rate by 50 basis points.

Since February 2025, the RBI has reduced the policy rate by 100 basis points. In its previous policy review in April, it had also trimmed the repo rate by 25 basis points to 6 per cent.

He added that after reducing repo by 100 bps in quick succession, monetary policy has limited space to support growth.

This is the first time since Covid-19 that the RBI has passed on three consecutive rate cuts, beginning February 2020.

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