RBI Cuts Repo Rate by 25 Basis Points to 6% – Second Consecutive Reduction in Two Months

Mumbai, April 9: 

The Reserve Bank of India (RBI) has announced a reduction in its benchmark repo rate by 25 basis points to 6.00%, effective immediately. This marks the second consecutive rate cut in just two months, following a similar move in February 2025. The decision, made by the Monetary Policy Committee (MPC) under the leadership of RBI Governor Sanjay Malhotra, was part of the central bank’s first monetary policy review of the fiscal year 2025-26.

The MPC’s unanimous decision aims to provide a boost to economic growth, which has been facing challenges from global uncertainties, including recent tariff announcements by U.S. President Donald Trump. The rate cut is expected to ease borrowing costs for consumers, particularly for home loans, car loans, and other forms of credit, offering relief to the middle class.

Since May 2020, the RBI has implemented seven interest rate hikes, bringing the benchmark rate up to 6.50% before holding it steady since February 2023. The current rate cut reflects a shift in the central bank’s stance, with Malhotra highlighting the global economic challenges and their potential impact on India’s economic stability.

In his address, Governor Malhotra also pointed to concerns about inflation, which remains a key challenge for the RBI despite the recent rate reductions. The decision to move the policy stance to “accommodative” is aimed at striking a balance between supporting growth and managing inflationary pressures.

This latest reduction in the repo rate follows market expectations, with some analysts predicting a 25-50 basis points cut. While the rate reduction is anticipated to benefit loan borrowers, economists continue to monitor global trade tensions and their effects on economic growth.

With the repo rate now at 6%, the RBI’s move could stimulate economic activity, particularly in sectors sensitive to borrowing costs. However, experts caution that inflationary risks remain a key concern for the central bank as it navigates the complexities of both domestic and international economic conditions.