RBI cuts repo rate by 25 basis points to 6%

The Reserve Bank of India’s Monetary Policy Committee on Wednesday cut the repo rate by 25 basis points, lowering it to 6% from 6.25%.

This is the second consecutive cut under Governor Sanjay Malhotra, who took office earlier this year. In February, the committee had cut the repo rate by 25 basis points, lowering it to 6.25% from 6.5%.

The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee decides on changes to it every two months.

A basis point is one-hundredth of a percentage point. Basis points are used to describe the percentage change in the value of a financial instrument.

Central banks usually reduce repo rates to stimulate economic growth by making borrowing cheaper for individuals and businesses. This translates to lower equated monthly instalments, or EMIs, for borrowers.

The move to cut repo rates on Wednesday came against the backdrop of the so-called reciprocal tariffs by the United States taking effect on Wednesday.

During a press briefing, Malhotra said the Monetary Policy Committee was unanimous in its decision to cut the repo rates in its meeting held from Monday to Wednesday.

The committee also decided to change the monetary policy stance from neutral to accommodative. “Our stance provides policy rate guidance without any direct guidance on...

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