Page 18 - Policy Economic Report - April 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

• The year-on-year inflation rate for March 2025 dropped to 3.34%, a decline of 27 basis points
from February 2025, marking the lowest monthly inflation rate since August 2019.

Key Monetary Policy decisions-

• The Monetary Policy Committee (MPC) unanimously decided to reduce the policy repo rate by 25
basis points, bringing it down to 6 per cent with immediate effect. The repo rate is the rate at
which the Reserve Bank of India (RBI) lends money to commercial banks.

• As a result, the Standing Deposit Facility (SDF) rate under the Liquidity Adjustment Facility (LAF)
has been adjusted to 5.75 per cent. The SDF allows banks to park excess funds with the RBI
without any collateral.

• The Marginal Standing Facility (MSF) rate and the Bank Rate have both been revised to 6.25 per
cent. MSF stands for Marginal Standing Facility, a provision made by the RBI that enables
scheduled commercial banks to obtain overnight liquidity if inter-bank funds completely dry up.

• These rate adjustments are consistent with the RBI’s objective of achieving the Consumer Price
Index (CPI) inflation target of 4 per cent, within a flexible band of ±2 per cent, while also
supporting economic growth.

Figure 12: Year on Year Inflation rate based on CPI

APRIL 2025 Source- RBI

Key Highlights for March 2025
• Food Inflation: The year-on-year food inflation based on the Consumer Food Price Index (CFPI)

stood at 2.69% in March 2025, the lowest since November 2021. This marks a sharp decline of
106 basis points from the previous month.

o Rural food inflation: 2.82%
o Urban food inflation: 2.48%

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