Fri Feb 07 06:45:48 UTC 2025: ## RBI Cuts Repo Rate by 25 Basis Points, First Reduction in Five Years
**New Delhi:** In a move that will provide significant relief to borrowers, the Reserve Bank of India (RBI) has announced a 25 basis point reduction in the repo rate, bringing it down to 6.25 percent. This marks the first rate cut in nearly five years and comes as the first monetary policy decision under new RBI Governor Sanjay Malhotra.
The decision, announced following a six-member Monetary Policy Committee (MPC) meeting, follows a period of rate hikes initiated in May 2022 in response to the Russia-Ukraine war. The RBI had previously paused rate adjustments in May 2023. The last rate cut occurred in May 2020, a 40 basis point reduction implemented in response to the COVID-19 pandemic.
Governor Malhotra stated that inflation targeting has proven beneficial for the Indian economy, citing lower average inflation since the introduction of the monetary policy framework. He also emphasized the importance of economic efficiency and the RBI’s commitment to strengthening and refining its prudential framework through stakeholder consultations. The rate cut is expected to lower borrowing costs for home and auto loans.
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