The Monetary Policy Committee (MPC) reduced the policy rate by 100 basis points to 12%, citing declining inflation (4.1% year-on-year in December 2024) and improving economic activity, though core inflation remains elevated. Real GDP growth for the first quarter of the financial year 2025 (Q1-FY25) slowed to 0.9% due to weaker agricultural performance but is projected to recover to 2.5–3.5% for FY25. Policy rates have seen a drop of 10% since June last year. The policy rate remained remained perched at 22% for around one year until it started dropping in June 2024. The current account surplus reached $1.2 billion in the first half of FY25 (H1-FY25), supported by strong remittances and export growth, with foreign exchange reserves expected to exceed $13 billion by June 2025. While fiscal revenues grew by 26% during H1-FY25, they remain below target, necessitating accelerated tax collection. Inflation is projected to average 5.5–7.5% for FY25, with near-term risks from global commod...
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