The Reserve Bank of India has lowered the repo rate by 25 basis points, reducing it to 5.25% in a move aimed at supporting economic activity and maintaining favorable financial conditions. The decision was approved unanimously by the Monetary Policy Committee during its latest policy review meeting.
With the benchmark lending rate now lower, banks may gradually pass on the benefit to customers through reduced interest rates on home loans, vehicle loans, and other forms of borrowing. The move is expected to improve affordability for consumers and encourage spending across sectors of the economy.
The central bank’s latest assessment suggests that inflationary pressures remain under control, creating room for a more growth-focused policy approach. Officials indicated that price stability has improved compared to earlier expectations, allowing policymakers to focus on sustaining economic momentum while remaining alert to global uncertainties.
India’s growth outlook has also strengthened in recent months. Economic activity has shown resilience despite challenges in the global environment, supported by domestic demand, investment activity, and improving credit growth.
In addition to the repo rate reduction, the central bank announced changes to other policy rates and outlined measures to ensure adequate liquidity in the financial system. These steps are intended to support smoother transmission of monetary policy and maintain stable financial conditions for businesses and consumers alike.
RBI Governor Sanjay Malhotra stated that the central bank will continue to closely monitor both inflation and growth trends while taking decisions that support long-term economic stability. He noted that India’s financial system remains strong, with healthy banking sector indicators and steady lending activity contributing to the overall economic outlook.
The latest policy action signals the RBI’s effort to balance growth and inflation objectives, offering support to borrowers while maintaining confidence in the broader economy.