India Cuts Repo Rate for First Time in Near 5 Years

2025-02-07 04:44 By Chusnul Chotimah 1 min. read

The Reserve Bank of India unanimously lowered its key repo rate by 25 basis points to 6.25% during its February meeting, marking the first reduction since May 2020 and aligning with market consensus.

This move brought borrowing costs to their lowest level since January 2023, aiming to counter slowing economic growth amid rising global trade uncertainty.

The decision was announced during Governor Sanjay Malhotra's inaugural monetary policy review.

Regarding the economic outlook, the central bank expects FY2025-26 GDP growth at 6.7% while maintaining the inflation forecast at 4.2%, with projections of 4.5% for Q1, 4.0% for Q2, and 3.8% for Q3.

For the current year, the real GDP is expected to grow at 6.4%, after an 8.2% rise last year.

Simultaneously, the RBI also slashed both the standing deposit facility (SDF) rate by 25 bps to 6% and the marginal standing facility (MSF) and bank rates to 6.50%.

Meanwhile, the RBI maintained the CRR at 4% after a 50 bps reduction in December.



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