Himdarshan Samachar

The Reserve Bank of India (RBI) on Friday announced a significant cut in the key policy interest rate following the meeting of the Monetary Policy Committee (MPC).RBI Governor Sanjay Malhotra announced a 50 basis point reduction in the repo rate, lowering it from 6 percent to 5.5 percent. This is the third consecutive Monetary Policy Committee meeting in which the central bank has decided to reduce interest rates.
This move is expected to bring relief to borrowers of home loans, auto loans, and other types of credit, although the actual benefit will only be realized once banks reduce their lending rates accordingly.
The RBI Governor explained that the decision to bring the repo rate to its lowest level in three years was based on a comprehensive assessment of economic and financial conditions. He said, "This step has been taken to support growth and in view of the declining trend in inflation."
Since February 2025, the RBI has cumulatively cut the repo rate by 100 basis points. In the previous meeting held in April, the repo rate was reduced by 25 basis points to 6 percent, which has now been further lowered to 5.5 percent.
The RBI has maintained its GDP growth forecast for the current financial year 2025-26 at 6.5 percent. Meanwhile, due to expectations of a good monsoon, the inflation forecast has been revised downward from 4 percent to 3.7 percent.
However, the MPC has changed its monetary policy stance from ‘accommodative’ to ‘neutral’, indicating that there may be limited room for further rate cuts in the near future.