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In an effort to stimulate the economy, the Reserve Bank of India (RBI) has lowered its primary repo rate for the first time in almost five years. This decision, made unanimously by the RBI Monetary Policy Committee (MPC), reduces the key rate by 25 basis points from 6.5% to 6.25%, as announced by Sanjay Malhotra in his initial significant address since assuming the position of RBI Governor in December last year. The MPC, which includes three members from the RBI and three external members, last adjusted the repo rate in May 2020 and has maintained it during the last eleven policy meetings. According to Mr. Malhotra, the global economic environment remains tough, with growth below historical norms. "High-frequency indicators are indicating resilience in the global economy," he remarked. While the Indian economy faces challenges from global factors, he emphasized its strength and resilience. He pointed out that with diminishing expectations surrounding the magnitude and pace of rate reductions in the United States, bond yields and the value of the dollar have increased.

The RBI Governor projected a real GDP growth of 6.4% for the financial year ending in March. For the upcoming financial year, he forecasts real growth rates of 6.7% in the first quarter, 7% in the second, and 6.5% for both the third and fourth quarters. Retail inflation for the current financial year is anticipated to be 4.8%, with a figure of 4.4% expected in the last quarter, Mr. Malhotra stated, noting that while core inflation may rise, it is likely to remain moderate. He also suggested that food inflation should decrease. Highlighting the adequacy of bank liquidity buffers, the RBI Governor declared intentions to undertake proactive steps to maintain orderly liquidity within the financial system. He remarked on the strong returns on assets and equity for banks. However, Mr. Malhotra expressed his concern regarding the rise in digital fraud cases, emphasizing the need for collective action from all involved parties. He urged banks to enhance their methods for preventing and detecting cyber fraud.