The Reserve Bank of India (RBI) has expressed a decisively positive outlook on food inflation, citing a broad-based seasonal decline in vegetable prices and expectations of a bumper wheat and pulses harvest. The assessment was shared in the minutes of the latest Monetary Policy Committee (MPC) meeting held from April 7 to 9, 2025, under the chairmanship of RBI Governor Sanjay Malhotra.
According to the minutes, recent data and second advance estimates point to a record wheat output and higher pulse yields for the Rabi season, alleviating previous concerns about crop performance. These developments, along with strong arrivals from the Kharif season, are expected to pave the way for sustained moderation in food inflation.
“Sharp declines in near-term inflation expectations for three months and one year are likely to help anchor overall inflation expectations in the economy,” the minutes noted.
Adding to the favorable inflationary outlook is the drop in global crude oil prices, which is expected to further ease cost pressures. However, the RBI cautioned that potential risks remain, especially from recurring weather-related disruptions and persisting global market uncertainties, including those arising from new trade tariffs.
Taking these factors into account and assuming a normal monsoon, the RBI projected the Consumer Price Index (CPI) inflation for the fiscal year 2025-26 at 4.0%. The quarterly projections are as follows: 3.6% in Q1, 3.9% in Q2, 3.8% in Q3, and 4.4% in Q4, with the risks viewed as evenly balanced.
Meanwhile, the central bank has revised its growth forecast for 2025-26 downward to 6.5% from 6.7%, citing increased uncertainty stemming from international trade tensions, particularly following reciprocal tariffs introduced by the United States. This forecast aligns with the National Statistics Office’s (NSO) estimate of 6.5% GDP growth for 2024-25, following a robust 9.2% expansion in 2023-24.
In a significant policy move, the MPC unanimously decided to cut the policy repo rate by 25 basis points to 6.00%, effective immediately. The move aims to support economic growth while maintaining the medium-term inflation target of 4%, within a tolerance band of ±2%.
The RBI reiterated its commitment to closely monitoring evolving global and domestic macroeconomic developments. The remaining five policy review meetings for the financial year are scheduled for June 4-6, August 5-7, September 29–October 1, December 3-5, and February 4-6.
The MPC comprises six members — three from the RBI, including the Governor, and three external members appointed by the Central Government.
