Introduction

The Reserve Bank of India’s first Monetary Policy Committee (MPC) meeting of 2025 is scheduled from February 4 to February 7. With newly appointed RBI Governor Sanjay Malhotra at the helm, all eyes are on him as market participants and policymakers anticipate potential shifts in monetary policy. The key highlight of the event will be on February 7, when Governor Malhotra is set to announce the meeting’s outcome.

How to Watch the Live Announcement? 

For those looking to watch the proceedings live, the RBI’s policy announcement is scheduled for February 7 at 10:00 AM. Governor Sanjay Malhotra will address the nation via RBI’s official YouTube channel. The Governor is expected to hold a media briefing at the RBI Press Conference at noon, which will also be streamed live. Viewers can watch the event in real time and stay updated about key policy decisions.

In addition to the RBI’s YouTube channel, major financial news platforms like Business Standard will also provide live coverage. These platforms will ensure broader accessibility for those following the announcement.

For regular updates and important highlights, viewers can check RBI’s official social media channels, including Facebook and X (formerly Twitter). These platforms will share key takeaways and insights from the policy announcement.

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Previous RBI MPC Meeting Update (December 2024)

In the previous Monetary Policy Committee (MPC) meeting held in December 2024, the Reserve Bank of India (RBI), led by former RBI Governor Shaktikanta Das, opted to keep the repo rate unchanged at 6.5% for the eleventh consecutive time. 

However, in an effort to enhance liquidity in the banking system, the central bank decided to lower the Cash Reserve Ratio (CRR) by 50 basis points (0.50%). Maintaining a ‘neutral’ policy stance, the RBI continued to strike a balance between managing inflation and fostering economic growth.

Also, the central bank revised its economic growth outlook for FY25, lowering the GDP growth forecast from 7.2% to 6.6% due to weaker-than-expected economic performance. This revision followed a notable slowdown in India’s GDP growth, which fell to 5.4% in Q2 FY25 marking the slowest expansion in seven quarters. The deceleration was primarily driven by subdued demand, a decline in industrial output, and global economic uncertainties that weighed on business activity and consumer spending.

Key Factors Influencing the Decision

Several factors will play a crucial role in shaping the RBI’s upcoming monetary policy decision. These include the government’s fiscal policy stance and the impact of global economic conditions.

1. Fiscal Policy Stance

The government’s fiscal policy also plays a key role in shaping monetary decisions. With increased public spending on infrastructure and welfare programs ahead of the general elections, fiscal deficit concerns remain high. If government borrowing rises significantly, it could put upward pressure on interest rates. This will make it more challenging for the RBI to implement accommodative policies. The central bank must strike a balance between supporting economic growth and ensuring financial stability.

2. Global Economic Conditions

External factors such as global economic growth, interest rate trends in the U.S., and geopolitical developments also influence the RBI’s policy direction. With the U.S. Federal Reserve maintaining a tight monetary policy and global trade facing uncertainties, capital outflows from India have increased which weakened the rupee. A depreciating rupee raises the cost of imports, contributing to inflationary pressures. Additionally, slowing global demand could impact India’s exports, which the RBI must consider while making policy adjustments.

Economic Context Leading Up to the Meeting

The upcoming RBI Monetary Policy Committee (MPC) meeting comes at a time when India’s economy is facing multiple challenges. One of the key concerns is the slowing GDP growth. India’s economic growth rate has declined to 5.4% in Q2 FY25.

Inflation remains another critical factor. While retail inflation eased to 5.22% in December 2024 from 5.48% in the previous month, it is still above the RBI’s target of 4%. High food and fuel prices continue to exert pressure on inflation trends. At the same time, the Indian rupee has depreciated significantly, reaching record lows against the U.S. dollar. 

This has raised concerns about imported inflation and could influence the RBI’s stance on interest rates. Given these economic conditions, market participants are closely watching whether the central bank will adjust its monetary policy to support growth while keeping inflation in check.

Conclusion

The RBI Monetary Policy meeting in February 2025 holds significant importance as it marks the first RBI MPC under Governor Sanjay Malhotra’s leadership. With economic growth slowing, inflation still above target, and liquidity concerns, market participants are keenly awaiting the repo rate announcement and any adjustments to the cash reserve ratio. These decisions will shape India’s finances in the coming months.

To know more about the RBI MPC meeting, watch the RBI Policy announcement live on RBI’s official platforms and follow key updates from financial news sources. Staying updated on these developments is crucial for investors and businesses.