Mumbai, February 6 – The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), under the leadership of newly appointed Governor Sanjay Malhotra, is set to announce its key decisions on Friday morning. This marks Malhotra’s first bi-monthly review meeting since taking charge in December 2024, following the completion of Shaktikanta Das’s six-year tenure.
Market experts speculate that the MPC may cut the repo rate by 0.25%, which, if implemented, would be the first rate cut in nearly five years. The repo rate has remained unchanged at 6.50% for the last two years. The last time RBI reduced the repo rate was in May 2020, when it was slashed by 0.40% to 4% amid the COVID-19 pandemic. Subsequently, to manage inflationary risks post the Russia-Ukraine war, rate hikes resumed in May 2022, peaking at 6.50% in February 2023. The three-day MPC meeting, which began on Wednesday, is expected to conclude with a formal announcement on Friday morning.
Several analysts and research firms believe that RBI is likely to reduce the repo rate by 0.25%, bringing it down to 6.25%. Financial experts suggest that both economic growth and inflation figures indicate a need for monetary easing, and a policy rate cut may receive strong support within the committee. Some believe that the reduction will help boost consumption and investment by making borrowing cheaper. Reports indicate that global financial institutions and industry bodies, including Bank of America Global Research and ASSOCHAM, also anticipate a rate cut. Meanwhile, SBI Research has mentioned in its analysis that a 0.25% reduction in the repo rate is expected in this policy review.
However, not all financial experts are convinced. Some analysts argue that global conditions remain unfavorable for monetary easing at this stage. Concerns over global economic trends and inflationary pressures might lead the central bank to hold its stance for now. As the MPC concludes its discussions, all eyes will be on Governor Sanjay Malhotra’s first major policy announcement, which could shape India’s interest rate trajectory in the coming months.
