RBI repo rate cut 2025
Mumbai, April 08, 2025 – In a decisive move to bolster India’s economy amid escalating global trade uncertainties, the Reserve Bank of India (RBI) announced a 25 basis point cut in its repo rate, bringing it down to 6%. The decision, unveiled today by RBI Governor Sanjay Malhotra following the Monetary Policy Committee (MPC) meeting, marks the second consecutive rate reduction this year and shifts the central bank’s stance from neutral to accommodative.
The rate cut comes against the backdrop of heightened trade tensions triggered by U.S. President Donald Trump’s imposition of a 26% tariff on Indian imports, effective April 9. With inflation under control—hovering at 3.61% in February, below the RBI’s 4% target—the central bank is prioritizing economic growth as global headwinds loom large. The MPC also revised its FY26 GDP growth forecast downward to 6.5%, reflecting caution over external pressures.
Governor Malhotra emphasized the need for proactive measures, stating, “The global economic landscape is shifting rapidly, with trade frictions posing risks to growth. This cut aims to support non-inflationary expansion while maintaining stability.” The accommodative stance signals potential for further easing, a move welcomed by borrowers but raising concerns about savings returns and rupee stability.
The decision is expected to lower borrowing costs, providing relief to millions of home loan, personal loan, and vehicle loan holders. Industry experts predict a boost in housing demand, with Samir Jasuja, CEO of PropEquity, noting, “Two consecutive cuts will ease EMI burdens, spurring real estate activity after a 50% price surge post-Covid.”
However, the move has sparked mixed reactions. While stock markets showed initial volatility—Sensex and Nifty dipped over 0.5%—analysts see long-term benefits for rate-sensitive sectors like banking and real estate. On the flip side, some economists warn of inflationary risks and a potential weakening of the rupee, which could offset gains if global commodity prices rise.
The RBI also highlighted robust agricultural output, with record wheat production and strong kharif arrivals, as a buffer against food inflation. Liquidity remains surplus at ₹1.5 lakh crore, further supporting the rate cut’s transmission to the broader economy.
As India navigates Trump’s tariff regime and a slowing global outlook, the RBI’s latest policy underscores its balancing act between growth and stability. With the next MPC meeting slated for June, all eyes will be on whether this accommodative shift heralds a sustained easing cycle.
Short Description:
RBI cuts repo rate by 25 bps to 6% on April 08, 2025, adopting an accommodative stance amid U.S. tariffs and global uncertainty. Get the latest on India’s monetary policy and its impact on loans and growth.
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