The Reserve Bank of India (RBI) has reduced its benchmark repo rate by 25 basis points, bringing it down to 6.25 percent from 6.5 percent. This decision, announced by RBI Governor Sanjay Malhotra, was made unanimously by the Monetary Policy Committee (MPC) and aims to address the challenges posed by the global economic landscape.
While the RBI acknowledged the resilience of the Indian economy, it also highlighted the pressure on the Indian rupee due to global factors, including the strengthening US dollar and capital outflows from emerging markets. The MPC's decision to cut the repo rate is seen as a measure to stimulate economic growth and potentially ease pressure on the rupee.
The move has been welcomed by real estate trade associations, who anticipate it will boost demand for affordable and mid-income housing, particularly in smaller cities. However, the impact on banking stocks has been negative, with shares falling following the announcement.