1 week Ago By Haripriya
Sign In Sign Up Top Stories The Reserve Bank of India (RBI), in its first bi-monthly Monetary Policy Committee (MPC) meeting for FY 2025–26, announced a 25 basis points cut in the policy repo rate, bringing it down from 6.25% to 6.00%.
The decision, taken during the 54th MPC meeting held between April 7-9, 2025, signals a major policy shift as the RBI also changed its stance from ‘neutral’ to ‘accommodative’. The shift in policy by RBI comes amid growing concerns of global uncertainties further effectuated by US President Donald Trump’s imposition of sweeping tariffs, which have unsettled financial markets worldwide. Read More: Poonam Gupta Becomes RBI Deputy Governor: First Woman in Over a Decade The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks.
A reduction in the repo rate lowers the borrowing cost for banks and non-banking financial companies (NBFCs), enabling them to lend to consumers and businesses at cheaper rates. How Does the Supreme Court Shape Tax Laws? Discover Landmark Rulings! Click here Consequently, reduced repo rates typically lead to lower interest rates on home loans, personal loans, car loans, and corporate credit, thereby stimulating borrowing and consumption. By facilitating easier access to credit, a cut in the repo rate is often aimed at boosting economic growth, especially in times of slowing private demand and external headwinds.
Read More: Former RBI Governor C Rangarajan Pushes for State Income Tax to Boost Revenue RBI Governor Sanjay Malhotra , in his address, highlighted that the global economic outlook remains riddled with risks arising from trade frictions and geopolitical tensions. The latest round of reciprocal tariffs imposed by the United States on Indian exports is expected to dampen merchandise growth and pose upside risks to inflation. While the RBI has noted a steady progress of the Indian economy towards price stability, actual growth continues to remain modest after a weak first half of Financial Year (F.
Y.) 2024-25. Inflation has moderated sharply, aided by a fall in food prices and crude oil, with the Consumer Price Index (CPI) inflation forecast pegged at 4% for F.
Y. 2025-26. The Governor further explained that the accommodative stance adopted by the MPC means that going forward, the RBI is inclined either to maintain the status quo or consider further rate cuts provided that similar global urgencies do not arise.
Malhotra emphasized that while growth prospects have improved, the impact of higher global tariffs and uncertainties will need continuous monitoring. Read More: Govt Notifies Major Amalgamation of RRBs Across 6 States: MP, Maharashtra, Odisha, Rajasthan, UP, and WB Immediate Effects on the Indian Market The Indian stock markets reacted positively, with banking and real estate stocks surging in response to expectations of lower borrowing costs. Bond yields have eased, reflecting the market’s approval of the policy direction.
How Does the Supreme Court Shape Tax Laws? Discover Landmark Rulings! Click here Amidst the changes, the RBI continues to maintain its real Gross Domestic Product (GDP) growth forecast at 6.5% for F.Y.
2025-26 but acknowledged downside risks emanating from global trade disruptions. Despite external uncertainties, the RBI has reiterated its confidence in India’s resilient services exports, strong rural demand, and dynamic and growing investment activity supported by healthy balance sheets of banks and corporates. Governor Malhotra further affirmed that the RBI remains committed to enabling non-inflationary growth and ensuring financial stability amid evolving global challenges.
Click the Blue Button Below to Access the RBI Governor’s Statement published on 9 April, 2025. Support our journalism by subscribing to Taxscan premium . Follow us on Telegram for quick updates Topics © 2025 Taxscan © 2025 Taxscan.
