The Reserve Bank of India (RBI) on Friday lowered the repo rate by 25 basis points, marking the first reduction in nearly five years. The move, announced by RBI Governor Sanjay Malhotra, aims to make loans cheaper and stimulate economic growth. The decision comes amid easing inflation and concerns about global risks hindering growth.
The rate cut is expected to benefit millions of home loan and small loan customers with floating rates, lowering their borrowing costs. This move follows the recent announcement of significant tax relief in the 2025-26 Budget, further supporting consumption.
Malhotra stated that the Monetary Policy Committee (MPC) deemed a less restrictive monetary policy appropriate given the current growth-inflation dynamics. The MPC will continue to assess the macroeconomic outlook and make decisions based on its findings in future meetings.