In a move aimed at stimulating domestic growth and easing borrowing costs, the Reserve Bank of India (RBI) has announced a 25 basis points cut in the repo rate, bringing it down to 6 per cent. This marks the second rate cut by the central bank this year, following a reduction to 6.25 per cent in February.
The decision, announced by RBI Governor Sanjay Malhotra, was taken unanimously by the Monetary Policy Committee (MPC). Lowering the repo rate— the interest charged by the RBI on loans to commercial banks — is expected to reduce lending rates for consumers, thereby making EMIs on loans more affordable.
“This rate cut will enable banks to lower their lending rates, improving credit flow to individuals and businesses,” said RBI Governor, while acknowledging the broader challenges posed by the global economic environment.
The central bank highlighted concerns about inflation risks emerging from ongoing global uncertainties, especially after the United States, under the Trump administration, imposed reciprocal tariffs on Indian exports. “The dent on global growth due to trade frictions will impede domestic growth,” Malhotra noted. However, he assured that India is actively engaging with the US on trade issues and emphasised that the RBI remains confident in managing domestic economic stability.
He also noted an uptick in urban consumption, driven by increased discretionary spending, and affirmed that the financial health of banks and corporates has improved. He further added, “The agriculture sector outlook remains positive, manufacturing is showing signs of revival, and the services sector continues to demonstrate resilience.”
With a cautious eye on global developments, the RBI reaffirmed its commitment to supporting domestic growth while maintaining macroeconomic stability.
