Thu Feb 06 15:20:00 UTC 2025: **RBI Expected to Cut Repo Rate by 25 Basis Points**

**Mumbai, February 6, 2025** – The Reserve Bank of India (RBI) is widely expected to reduce the repo rate by 25 basis points to 6.25% on Friday, marking the first rate cut in nearly five years. This prediction comes from various sources, including SBI research, Assocham, DBS Group Research, and BofA Global Research.

The three-day Monetary Policy Committee (MPC) meeting, chaired by the new RBI Governor Sanjay Malhotra, concluded today. The decision will be announced tomorrow morning. The last repo rate reduction was a 40 basis point cut to 4% in May 2020, a response to the Covid-19 pandemic. A subsequent rate hike cycle, initiated in May 2022 due to the Russia-Ukraine war, concluded in May 2023.

Analysts cite moderating food inflation and promising rabi crop prospects as factors supporting a rate cut. However, not all agree; YES Securities Executive Director Amar Ambani anticipates the RBI will maintain the current rate, citing unfavorable global conditions. Regardless of the repo rate decision, some believe the RBI may take additional steps to inject liquidity into the market. The potential impact on borrowers, particularly home loan holders, is significant, with rates currently ranging between 8.5% and 9% per annum. The announcement is also anticipated to influence investor decisions, particularly given the recent Union Budget’s personal tax rebate proposal.

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