In a larger-than-expected move, the Reserve Bank of India (RBI) on Friday slashed the repo rate by 50 basis points, taking it down from 6 percent to 5.5 percent.
The choice, proclaimed after the bi-monthly financial policy review, comes as an astonishment to market observers who had expected a smaller 25-basis-point discount.
This aggressive cut signals the RBI’s determined to stimulate economic growth amid easing of inflationary pressures. The repo rate the interest rate at which the central bank lends to commercial banks, now attitudes at its lowermost level in over two years.
Announcing the decision, RBI Governor Shaktikanta Das stated that the central bank remains focused on reviving growth while guaranteeing inflation remains within the target range. “The decision to cut the rate by 50 basis points was taken with the objective of supporting economic recovery while retentive price stability,” Das said.
The Monetary Policy Committee (MPC) voted 5:1 in favor of the rate cut, indicating broad consensus within the central bank. The RBI also revised its GDP growth forecast upward for the fiscal year 2025-26, citing stronger-than-expected demand recovery in key sectors.
The prompt influence of the rate cut will be seen in lower borrowing costs. Banks are foreseeable to pass on the advantage to consumers, leading to reduced EMIs on home, auto, and personal loans. Industry experts say the move could improve credit growth and consumer spending.
Equity markets replied certainty, with banking and realty stocks gaining inducement. The rupee, however, weakened rather against the US dollar due to anxieties over interest rate differences.
This marks the first rate cut in 2025, reversing the RBI’s earlier posture of financial constriction seen in 2022–2023. Predictors trust the move sets the tone for a more accommodative policy posture in the close term.
Headline-RBI Delivers Surprise 50 bps Repo Rate Cut to 5.5 percent; EMIs Set to Fall
In a larger-than-expected move, the Reserve Bank of India (RBI) on Friday slashed the repo rate by 50 basis points, taking it down from 6 percent to 5.5 percent.
The choice, proclaimed after the bi-monthly financial policy review, comes as an astonishment to market observers who had expected a smaller 25-basis-point discount.
This aggressive cut signals the RBI’s determined to stimulate economic growth amid easing of inflationary pressures. The repo rate — the interest rate at which the central bank lends to commercial banks — now attitudes at its lowermost level in over two years.
Announcing the decision, RBI Governor Shaktikanta Das stated that the central bank remains focused on reviving growth while guaranteeing inflation remains within the target range. “The decision to cut the rate by 50 basis points was taken with the objective of supporting economic recovery while retentive price stability,” Das said.
The Monetary Policy Committee (MPC) voted 5:1 in favor of the rate cut, indicating broad consensus within the central bank. The RBI also revised its GDP growth forecast upward for the fiscal year 2025-26, citing stronger-than-expected demand recovery in key sectors.
The prompt influence of the rate cut will be seen in lower borrowing costs. Banks are foreseeable to pass on the advantage to consumers, leading to reduced EMIs on home, auto, and personal loans. Industry experts say the move could improve credit growth and consumer spending.
Equity markets replied certainty, with banking and realty stocks gaining inducement. The rupee, however, weakened rather against the US dollar due to anxieties over interest rate differences.
This marks the first rate cut in 2025, reversing the RBI’s earlier posture of financial constriction seen in 2022–2023. Predictors trust the move sets the tone for a more accommodative policy posture in the close term.
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