Updates on RBI policy meet

RBI cut repo rate by 25 bps and maintained stance neutral, in line with expectation: The Reserve Bank of India (RBI), through a unanimous decision, reduced the repo rate by 25 basis points (bps) while retaining a neutral stance.

This policy shift was coupled with updated projections for FY26, including an increase in the Real GDP growth forecast to 7.3% for FY26 from 6.8% and a revised CPI inflation estimates of 2.0 from 2.6% for FY26.

Furthermore, to manage financial conditions, the RBI announced an Open Market Operations (OMO) purchase of Rs. 1.0 lakh crore in December to inject liquidity, alongside a plan to purchase $5 billion USD over three years to stabilize the rupee, ultimately benefiting credit-sensitive sectors like NBFCs, SFBs, MFIs, auto, real estate and gold financiers.

However, Banks will see some pressure on their NIMs in the short term.