RBI Monetary Policy Meeting 2025: Repo Rate Basis Points Cut For The First Time In Five Years

Get the latest updates on the RBI Monetary Policy Meeting 2025, where the Reserve Bank of India has announced a historic repo rate cut, marking the first reduction in five years. Learn more about it in this article.
rbi monetary policy meeting 2025

In a groundbreaking move, the Reserve Bank of India (RBI) has unveiled a seismic shift in its monetary policy stance, slicing the repo ratefor the first time in five years. This pivotal decision, announced at the RBI Monetary Policy Meeting 2025, is poised to send ripples through the Indian economy, influencing inflation, interest rates, and the overall financial landscape. Read this article for more information.

RBI Monetary Policy Meeting 2025: Repo Rate Cut

The Reserve Bank of India (RBI) has made a historic move by cutting the repo rate by 25 basis points to 6.25 per cent, marking the first rate cut in five years. This decision, taken by the six-member Monetary Policy Committee (MPC), is expected to stimulate economic activity by making borrowing cheaper, thereby encouraging spending and investment.

The Rationale Behind the Rate Cut

The RBI's decision to cut the repo rate is a clear indication of its commitment to boosting economic growth. With the Indian economy facing various challenges, including a slowdown in growth and rising inflation, the RBI has taken a proactive step to address these concerns. By reducing the repo rate, the RBI aims to increase liquidity in the market, making it easier for businesses and individuals to access credit.

A Neutral Stance: Balancing Growth and Inflation

The MPC has decided to maintain a "neutral" stance for the economy, providing flexibility to respond to the evolving macroeconomic environment. This stance is crucial in balancing economic growth and inflation, ensuring that the economy remains on a stable growth trajectory. According to RBI Governor Sanjay Malhotra, the inflation targeting framework has served the Indian economy well, keeping average inflation lower post its introduction.

Navigating Global Uncertainty

The RBI's policy announcement comes amid global uncertainty, with US President Donald Trump announcing tariffs on Canada, Mexico, and China. The tariffs have triggered a fear of global trade wars, resulting in a rise in the dollar against major currencies. Despite these challenges, the RBI remains committed to advancing India's economic growth and stability.

Impact Analysis

Ameet Venkeshwar, Chief Business Officer, LoanTap, said, "The reduction in repo rate by RBI was long due and long-awaited. People will benefit as the cost of borrowing will reduce. This will also boost the lending industry since the lending rates will go down. Hopefully, this will not have any impact on inflation, and we see further cuts in interest rates going forward. This, along with the Budget’s new tax structure, will put more money in the hands of the consumer, giving them more spending power."

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