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RBI Policy Shift: A Boost for Growth Amid Global Challenges

The Reserve Bank of India (RBI) is making waves with its latest monetary policy moves, signaling a proactive stance to fuel India’s economic engine. On February 7, 2025, under Governor Sanjay Malhotra’s leadership, the RBI slashed the repo rate by 25 basis points to 6.25%—the first cut in nearly five years—aiming to spur growth as inflation eases to a projected 4.2% for FY26.

This follows a 50 bps Cash Reserve Ratio (CRR) reduction in December 2024, injecting ₹1.16 lakh crore into the banking system. With GDP growth pegged at 6.7% for FY26, the RBI is balancing domestic resilience against global headwinds like geopolitical tensions and a strengthening US dollar.

Recent updates hint at more to come. Posts on X suggest the RBI might double foreign investment caps to 10% per listed company and ease FEMA rules, potentially unlocking significant capital inflows.

Experts like Uday Kotak and Sandip Sabharwal argue for deeper liquidity measures—further rate cuts or CRR reductions—to amplify monetary transmission and support sectors like retail lending. Meanwhile, the RBI’s April 2025 open market operations (OMOs) worth ₹80,000 crore aim to keep liquidity robust.

As India navigates a complex global landscape, the RBI’s “neutral” stance offers flexibility. Will these steps reignite private investment and consumption? Stay tuned as the next policy review looms.

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