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RBI cuts repo rate by 25 bps to boost economy, predicts GDP growth at 6.7% in next fiscal year

The Reserve Bank of India (RBI) has reduced its key repo rate by 25 basis points, from 6.5% to 6.25%, marking the first rate cut in nearly five years. The decision was made by the RBI's Monetary Policy Committee (MPC), which had previously kept rates unchanged for 11 consecutive meetings. RBI Governor Sanjay Malhotra emphasized the challenging global economic environment, with growth below historical averages, while acknowledging India's resilience despite global headwinds. He noted that the decline in expectations for US rate cuts has led to rising bond yields and a stronger dollar. The RBI also maintained its real GDP growth forecast for FY26 at 6.7%, though it revised the growth outlook for Q1 FY26 down to 6.7% (from 6.9%) and for Q2 FY26 down to 7% (from 7.3%). The growth forecast for Q3 and Q4 FY26 remains at 6.5%.

first published: Feb 7, 2025 10:59 am