RBI Slashes Repo Rate Again: Key Economic Impacts Unveiled

The Reserve Bank of India (RBI) has announced a 25 basis point cut in the repo rate during its first bi-monthly credit policy for the fiscal year 2025-26. The monetary stance has shifted to accommodative, and GDP growth projections have been lowered. Inflation is projected to decrease to 4%.

The Reserve Bank of India (RBI) has announced a significant change in its fiscal strategy by reducing the key interest rate, or repo rate, by 25 basis points to 6 percent. This decision, marking the second consecutive reduction, follows the 54th Monetary Policy Committee (MPC) meeting, which concluded on a unanimous note.

In a shift to an 'accommodative' monetary stance, the RBI has signaled its openness to maintain or further cut rates, while simultaneously lowering GDP growth forecasts for the fiscal year 2025-26 from 6.7 percent to 6.5 percent. Despite uncertainties in global trade tariffs exacerbating economic outlooks, the Indian economy continues to progress toward stability and sustained growth.

To boost digital transactions, the RBI has allowed the National Payments Corporation of India (NPCI) to raise the limit for UPI-based person-to-merchant payments. The central bank also plans to review guidelines on lending against gold jewelry and expand co-lending frameworks, with potential regulatory changes forthcoming. The MPC is set to reconvene from June 4 to 6, 2025.

(With inputs from agencies.)