In a significant move aimed at supporting India’s economy, the Reserve Bank of India (RBI) has cut the repo rate from 6.25% to 6%. The announcement came during the latest Monetary Policy Committee (MPC) meeting, led by RBI Governor Sanjay Malhotra.
This decision comes at a time when global markets are facing fresh uncertainties due to new trade tariffs imposed by former U.S. President Donald Trump. These tariffs have triggered concerns about international trade and their potential impact on India’s exports and overall economic stability.
Why the Rate Cut?
Governor Malhotra explained that the rate cut is meant to give a boost to the Indian economy by making borrowing cheaper. When the repo rate is lowered, banks can borrow money from the RBI at a lower cost. This usually leads to lower interest rates for consumers and businesses on loans, helping to encourage more spending and investment.
“We are closely watching global developments, especially the effects of the new U.S. tariffs. To protect our economy and support growth, we’ve decided to reduce the repo rate,” said Governor Malhotra during the press briefing.
What It Means for You
This move could be good news for homebuyers, businesses, and anyone with loans. Lower interest rates mean lower EMIs (equated monthly installments), making it easier for people to take loans for homes, cars, and businesses.
For small and medium-sized businesses, the rate cut could bring some relief amid rising raw material costs and uncertain global demand.
A Timely Decision
Experts believe the RBI’s decision comes at the right time. With inflation under control and growth showing signs of slowing down, cutting the repo rate is a step toward keeping the economy on track.
Financial analyst Neha Mehta said, “This rate cut shows the RBI is being proactive. It’s trying to stay ahead of the curve and make sure that India’s economy remains stable, even as global challenges grow.”
Looking Ahead
The RBI has also hinted that it will continue to closely monitor the global situation and take further steps if necessary. For now, this rate cut is a sign that the central bank is ready to support the economy through tough times.
