SBI Ecowrap: RBI's Rare Rate Cut Amid High Growth, Low Inflation

• RBI cut its repo rate by 25 basis points to 5.25%, a rare move given India's high growth and ultra-low inflation, according to SBI Research.
• The central bank sharply revised down its FY26 CPI inflation projection to 2.0% and expects it to remain below 4% through H1 FY27.
• RBI raised its FY26 real GDP growth projection to 7.3% from 6.8%, indicating robust economic expansion.
• To manage liquidity, RBI announced ₹1 lakh crore in Open Market Operations and a $5 billion USD/INR buy-sell swap.
• The banking system remains sound with strong credit growth and improved asset quality, despite some recalibration needed due to rate changes.

Why It Matters: RBI's unusual rate cut despite strong growth and low inflation affects your finances.