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Very limited space for further policy rate cut, says RBI Governor
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....ery limited space for further policy rate cut, says RBI Governor<BR>FEMA / RBI<BR>Dated:- 6-6-2025<BR>PTI<BR>Mumbai, Jun 6 (PTI) Reserve Bank Governor Sanjay Malhotra on Friday said there is very little scope for rate cut in the current circumstances after the central bank reduced the policy rate by 50 basis points taking the total reduction to 100 bps since February. Addressing media after unve....
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....iling bi-monthly monetary policy, Malhotra said, future monetary policy actions will depend upon incoming data. "There is now very limited space for the monetary policy, actually, given the current circumstances...growth (projection) is about 6.5 per cent, inflation, we are projecting at 3.7 per cent for this year and above 4 per cent for the next next year...if these were to play out, there is ....
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....very limited space," he said. "We will continue to monitor the incoming data and we will move primarily what the data suggests to us," he said. Earlier in the day, RBI cut key policy rate by more-than-expected 50 basis points, a third consecutive reduction. With this, the repo rate has now come down to 5.5 per cent, the lowest in the last three years. In all, RBI has now cut interest rate by....
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.... a total of 100 basis points in 2025, starting with a quarter-point reduction in February - the first cut since May 2020 - and another similar-sized cut in April. The central bank, at the same time, changed its monetary policy stance to "neutral" from accommodative. Stressing that rate cut will have positive effect on growth, he said, the impact will be seen only in the later half of FY26. H....
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....e also expects rate transmission to be faster compared to the past trends. On inflation, Malhotra said it can be assumed that RBI has won the fight against price rise. The RBI has also slashed inflation forecast for the current fiscal to 3.7 per cent from the earlier estimate of 4 per cent in April, as it expects core inflation to remain benign with the easing of international commodity prices....
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..... The sub-4 per cent average retail inflation projection is the lowest in recent years. The RBI, which cut key policy rate by 50 basis points to 5.5 per cent, said that despite these favourable prognoses, it would remain watchful of weather-related uncertainties and still evolving tariff-related concerns with their attendant impact on global commodity prices. As regards CRR cut, he said, it ....
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....will certainly boost credit flow. RBI decided to slash Cash Reserve Ratio (CRR) by a huge 100 bps, which will unlock Rs 2.5 lakh crore liquidity by December to the banking system for lending to productive sectors of the economy. With the reduction in four equal tranches ending November 29, 2025, the CRR would come down to 3 per cent. This means that commercial banks would have to maintain a lo....
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....wer level of 3 per cent in cash with the RBI allowing them to have higher funds for lending. PTI AA DP CS ANU<BR> News - Press release - PIB....