RBI Cuts Repo Rate by 25 bps to 6.25% for the First Time in 5 Years

The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has slashed the repo rate by 25 basis points to 6.25%, after keeping it unchanged for nearly two years. Repo rate is the interest rate at which the central bank (RBI) lends money to commercial banks.

As of now, interest rates stood at 6.5%. The RBI initiated cuts in interest rates for the first time in the last five years.

The move will instil growth in the economy by making borrowing cheaper while also ensuring a boost in investments and spending.

RBI governor Sanjay Malhotra said that the outlook of the global economy remains in a tough spot as it’s growing below the historical average. However, the Indian economy looks strong and resilient despite global headwinds.

Governor Sanjay Malhotra said that GDP forecast for the upcoming fiscal year is set to touch 6.7%. While the central bank has projected the retail inflation to touch 4.2% in the upcoming financial year, it retained the projection for 2024-24 at 4.8%.