RBI MPC cuts repo rate by 25 bps

RBI Governor Sanjay Malhotra said on Wednesday that the Monetary Policy Committee (MPC) has unanimously decided to reduce the policy rate by 25 basis points (bps) from 6.25 percent to 6 percent.

RBI Repo Rate: Reserve Bank of India (RBI) Governor Sanjay Malhotra has provided significant relief to millions. The RBI Governor announced on Wednesday that the Monetary Policy Committee (MPC) has unanimously decided to reduce the policy rate by 25 basis points (bps) from 6.25 percent to 6 percent. This will lead to a decrease in EMIs for home and car loans. The central bank’s decision comes at a time when it is concerned about the impact of US President Donald Trump’s tariffs.

Second Consecutive Interest Rate Cut

The RBI’s MPC has reduced the repo rate by 0.25 percent for the second consecutive time. Following the RBI’s announcement of the repo rate cut, interest rates on home loans, personal loans, deposits, and vehicle loans are expected to decrease. Experts had anticipated this RBI decision. Earlier in February, the six-member Monetary Policy Committee (MPC) announced its first rate cut since May 2020 amidst an economic slowdown.

Monetary Policy Statement by Shri Sanjay Malhotra, RBI Governor- April 09, 2025, 10 am https://t.co/0OCWkvfgc3

— ReserveBankOfIndia (@RBI) April 9, 2025

GDP Growth Rate Expected at 6.5 Percent

The RBI Governor stated that the GDP growth rate is expected to be around 6.5 percent this year. He added that this is higher than the 9.2 percent growth rate seen last year. Malhotra also mentioned that the outlook for the agricultural sector remains bright in the current year due to healthy reservoir levels and robust crop production.

According to the RBI, inflation is likely to remain at 4.8 percent in the current fiscal year. However, a 10 basis point increase has been added to the inflation for the fourth quarter, raising it from 4.4 percent to 4.5 percent.

Trump Tariffs Could Impact Merchandise Growth

The RBI Governor acknowledged that tariffs are expected to impact merchandise exports. He also stated that India’s GDP is growing at a rate of 6.5 percent in fiscal year 26. Inflation is estimated at 4 percent. However, the central bank’s rate-setting body cannot remain complacent following the announcement of widespread tariffs by US President Donald Trump. Trump has announced a 26 percent reciprocal tariff rate on India, effective from April 9, which could further increase inflationary pressure.