Sat Feb 08 00:40:38 UTC 2025: ## RBI Cuts Repo Rate by 25 bps, First Cut Since 2020

**Mumbai, February 7, 2025** – The Reserve Bank of India (RBI) today announced a 25 basis points (bps) cut in the repo rate, bringing it down to 6.25 percent. This is the first repo rate reduction since May 2020, when a 40 bps cut was implemented in response to the COVID-19 pandemic. The decision was made by the Monetary Policy Committee (MPC) after a three-day meeting concluded this morning. The MPC, chaired by newly appointed Governor Sanjay Malhotra, maintained a “neutral” stance.

The repo rate, the rate at which commercial banks borrow from the RBI, has remained steady at 6.50 percent for the past two years. The reduction is expected to lead to lower EMIs on various loans, including home and vehicle loans.

The RBI cited easing inflation as the primary reason for the cut. While retail inflation reached a high in October, it declined to 5.22 percent in December. The RBI projects inflation to further soften to 4.2 percent in the next fiscal year (2025-26), gradually approaching its target of 4 percent. The central bank also maintained its forecast for economic growth at 6.4 percent for the current fiscal year and projected 6.7 percent growth for the next.

Governor Malhotra emphasized the RBI’s commitment to a judicious monetary policy to maintain price stability, sustainable economic growth, and financial stability. He acknowledged that while the Indian economy remains strong, it is not immune to global challenges.

The decision was met with mixed reactions. While some economists welcomed the move as necessary to stimulate investment and boost exports, aligning India’s interest rates with global trends, others cautioned that the cut might not significantly impact consumer spending immediately. DBS Bank’s senior economist Radhika Rao expects another 0.25 percent cut in April.

In a separate announcement, the RBI unveiled plans to launch special internet domains – ‘bank.in’ for banks and ‘fin.in’ for non-banking financial companies – to combat the rising cases of digital payment fraud. This initiative, effective April 2025, aims to enhance cybersecurity and build trust in digital banking services.

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