The three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India has started from today. The result of this important meeting will be announced on Friday. This meeting is taking place at a time when the Central Bank has relaxed its monetary policy significantly in the last one year and there are many uncertainties on the global and domestic front.
First meeting of MPC after budget
This is the first meeting of the MPC after the tech-centric Budget presented by Finance Minister Nirmala Sitharaman on February 1. Also, the situation regarding the India-US trade agreement is not completely clear yet, because the governments of both the countries have not made all its terms public. In such a situation, market and policy experts are keeping a special eye on this meeting.
How much interest rate reduction has taken place since February?
In the last one year, RBI has significantly relaxed its monetary policy with the aim of supporting economic growth. Since February, the central bank has reduced the repo rate by a total of 125 basis points. In the December MPC meeting also, the repo rate was reduced by 25 basis points to 5.25 percent. Along with this, RBI had also revised the economic growth estimates.
The central bank has estimated India’s economic growth rate for the current financial year to be 7.3 percent, which is about half a percentage point higher than the earlier estimate.
Retail inflation increased in December
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 (yearly) in December 2025. This increase in inflation compared to December 2024 was due to increase in prices of personal care, vegetables, meat-fish, eggs, spices, pulses and related products. Headline inflation increased by 62 basis points in December 2025 compared to November 2025.
In the next three days, MPC members will discuss in detail the inflation trend and economic growth prospects. The decision on Friday will indicate which direction the RBI is going to take going forward on interest rates and monetary policy, especially at a time when inflation remains relatively under control and growth remains stable.
