In a major liquidity-boosting measure, the Reserve Bank of India (RBI) has announced a 100 basis points reduction in the Cash Reserve Ratio (CRR), bringing it down from 4% to 3%. RBI Governor Sanjay Malhotra made the announcement during the post-policy address, stating that the move aims to ease liquidity conditions and support credit flow in the system.
This announcement comes alongside a series of policy decisions taken during the latest Monetary Policy Committee (MPC) meeting, including a sharper-than-expected 50 bps cut in the repo rate to 5.50% and a shift in the policy stance from “accommodative” to “neutral.”
Malhotra said that while the global economic environment remains fragile, India’s domestic conditions offer significant opportunities. The RBI also revised its FY26 CPI inflation forecast downward to 3.7% from 4%, with quarterly projections ranging from 2.9% in Q1 to 4.4% in Q4.
Markets responded swiftly to the policy cues. India’s 10-year government bond yield fell by 10 basis points to 6.1465%, reflecting expectations of continued monetary support. The rupee remained stable in early trade ahead of the U.S. jobs data expected later in the day.
The CRR cut is expected to release significant liquidity into the banking system, supporting credit availability and economic recovery amid tightening global financial conditions.
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