RBI cuts repo rate to 6%: A boost to economic growth
RBI cuts repo rate to 6%: A boost to economic growth
The Reserve Bank of India's Monetary Policy Committee, which has six members, reduced the policy rate by 25 basis points to 6% from 6.25%. This is the second successive rate cut since May 2020.It is a step to increase economic growth amid slowdown.
Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday stated that the Monetary Policy Committee (MPC) has decided unanimously to cut the policy rate by 25 basis points (bps), from 6.25 per cent to 6 per cent.
Why was this done?
Economic Slowdown: The economy has slowed down, and growth is estimated to be at 6.5% in fiscal 2025.
US Tariffs: US imposition of 26% counter-rebalancing tariffs on Indian imports has generated worries regarding how it will affect India's GDP growth.
Inflation Management: Retail inflation has been managed, the February 2025 levels being 3.61% against the RBI target of 4%.
What to expect next
Rate Cuts: Economists are also expected to further cut interest rates by a further 50-75 basis points in order to spur the economy.
Change in Policy Stance: RBI can alter the policy stance to "accommodative" from "neutral," reflecting its intention to lower rates further.
Impact on borrowers
Reduced Interest Rates: The rate cut will result in reduced interest rates on home loans, car loans, and personal loans, and make borrowing cheaper.
Boost to Economic Activity: Reduced lending interest rates should cause economic activity to pick up because they encourage investments and borrowing.
