Fri Feb 07 05:10:30 UTC 2025: ## RBI Cuts Repo Rate for First Time in Five Years to Boost Economy
**Mumbai, India** – The Reserve Bank of India (RBI) has slashed its key repo rate by 25 basis points (bps) to 6.25%, marking the first reduction in nearly five years. The unanimous decision by the Monetary Policy Committee (MPC), announced this morning by newly appointed Governor Sanjay Malhotra, aims to stimulate economic growth amidst a challenging global environment.
The last repo rate cut occurred in May 2020. The MPC, comprised of three RBI members and three external members, had maintained the rate unchanged for the past eleven policy meetings.
Governor Malhotra acknowledged the global economic slowdown, noting that while high-frequency indicators suggest resilience, India is not immune to global headwinds. He cited rising bond yields and the dollar as a result of receding expectations of US rate cuts.
The RBI forecasts India’s real GDP growth at 6.4% for the fiscal year ending March 2024. For the upcoming fiscal year, projections are 6.7% in Q1, 7% in Q2, and 6.5% in both Q3 and Q4. Retail inflation is projected at 4.8% for the current fiscal year, with core inflation expected to rise moderately. Food inflation is anticipated to ease.
Malhotra assured that bank liquidity buffers are sufficient and the RBI will take proactive steps to maintain orderly liquidity conditions. He also highlighted the robust return on assets and equity for banks. However, he expressed concern over the surge in digital frauds, urging banks to strengthen their preventative and detection mechanisms.
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