Reserve Bank of India (RBI) governor Sanjay Malhotra has announced the Monetary Policy Committee has cut the benchmark repo rate by 26 basis points.

The former revenue secretary in the Ministry of Finance, Malhotra is expected to announce the cuts to lower interest rates for economy’s growth which is expected to reach a four year low.

The central bank has reduced key interest rates by 25 bps, a much-needed relief for liquidity boost, but has kept its stance 'neutral'

RBI Governor Sanjay Malhotra announces a 25 basis point cut in the repo rate, lowering it to 6.25%, marking the first reduction in five years. The committee unanimously decided to maintain a neutral stance.

The Indian economy, though continuing to remain strong and resilient, also did not remain immune to these global headwinds, with the Indian Rupee coming under depreciation pressure in the recent months.

This marked the first rate reduction from the central bank in almost five years and this decision will translate into reduced borrowing costs and potentially help homemakers, experts explained.

The MPC under the new RBI governor will have to walk a tightrope between taming inflation and boosting economic growth. India’s GDP growth in Q2 FY25 slipped to a seven-quarter low of 5.4%. The monetary policy committee forecasts India’s gross domestic product (GDP) to grow at 6.7% in the financial year 2025-26.

Given the current economic landscape, moderating inflation, and sluggish growth, another 25-50 bps rate cut within this calendar year remains a strong possibility

The movements in Rupee must not be looked at from day-to-day movements and seen at a longer time frame, RBI Governor said, adding that global uncertainties are a higher worry at this stage. The rate that the rupee settles is a function of demand and supply.

The Reserve Bank of India cut the repo rate by 25 basis points to 6.25%, marking its first reduction in nearly five years. The central bank aims to balance inflation control with economic growth, maintaining a neutral stance amid mixed expert reactions.

The Reserve Bank of India’s monetary policy committee (MPC) today unanimously slashed the repo rate by 25 basis points to 6.25% after keeping the key policy rate unchanged for six consecutive times. The MPC also decided unanimously to continue with the 'neutral' policy stance.