In a significant policy shift, the Reserve Bank of India (RBI) on Wednesday, April 9, changed its monetary policy stance from ‘neutral’ to ‘accommodative’, signaling a more growth-supportive approach in the face of rising global headwinds. The decision was taken during the first bi-monthly Monetary Policy Committee (MPC) meeting of FY26, chaired for the first time by Governor Sanjay Malhotra.
What does an accommodative stance mean?
An accommodative stance in monetary policy refers to a strategy aimed at supporting economic growth. Central banks adopt this stance when they want to stimulate the economy—usually by lowering interest rates—so that borrowing becomes cheaper and demand increases.
In contrast:
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A tightening stance involves increasing interest rates to combat inflation by reducing spending and credit.
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A neutral stance implies a wait-and-watch approach, allowing the central bank the flexibility to raise or lower rates depending on how the economic situation unfolds.
With this change in stance, the RBI has signaled that going forward, in the absence of new economic shocks, the Monetary Policy Committee is likely to either maintain the status quo or implement further rate cuts.
This policy shift came alongside a 25 basis point reduction in the repo rate to 6.00%, the second consecutive rate cut after February 2025’s similar move. The Standing Deposit Facility (SDF) rate has been brought down to 5.75%, and the Marginal Standing Facility (MSF) rate has been cut to 6.25%.
Addressing inflation, Governor Malhotra noted a “decisive improvement in the inflation outlook.” He stated:
“On the inflation front, while the sharper-than-expected decline in food prices has given us comfort, we remain vigilant to possible risks from global uncertainty and weather disruptions. The MPC noted that inflation is currently below the 4% target, supported by a substantial fall in food prices. Moreover, there is now greater confidence of durable alignment of headline inflation with the 4% target over a 12-month horizon.”
The RBI’s dovish tilt also comes in response to growing global economic concerns. On the same day as the policy announcement, U.S. President Donald Trump’s 26% reciprocal tariff on Indian goods took effect, alongside a broader 104% duty on Chinese imports. These developments have rattled global markets and could adversely impact India’s export growth and investment flows.
Economists estimate that such external shocks may reduce India’s GDP growth by 20–40 basis points in FY26. The RBI’s shift to an accommodative stance is seen as a preemptive measure to safeguard growth and maintain macroeconomic stability in this uncertain climate.
