RBI News – On February 7, 2025, the RBI reduced the repo rate by 25 basis points to 6.25%, marking its first cut in five years. The neutral policy stance was retained, reflecting caution amid global trade uncertainties.
Highlights
- The RBI cut the repo rate by 25 basis points to 6.25%, the first cut in five years,
- While injecting ₹1.5 trillion in liquidity,
- Inflation is projected at 4.8% for FY25, with GDP growth at 6.4%.
- Discover the implications for India’s economy.
RBI Slashes Repo Rate to 6.25% in Historic February 2025 Move
The RBI projected FY25 inflation at 4.8% and FY26 at 4.2%, with GDP growth at 6.4% for FY25 and 6.7% for FY26. To support growth, the RBI infused ₹1.5 trillion in liquidity and conducted ₹20,000 crore in Open Market Operations (OMO). Governor Das highlighted the need to shield India’s economy from external shocks, such as U.S. tariffs.
The rate cut aimed to lower borrowing costs, benefiting businesses and consumers. Banks were expected to pass on benefits, boosting credit demand. This move signaled the RBI’s shift toward a growth-focused monetary policy.
