RBI’s Repo Rate Cut: A Game-Changer for Borrowers and Markets

Insights Market25 Feb, 2025Finance

After nearly five years, the Reserve Bank of India has reduced the repo rate by 25 basis points, lowering it from 6.50% to 6.25%. This means cheaper loans, reduced EMIs, and mixed market reactions. Why Did RBI Reduce the Rate? The Monetary Policy Committee (MPC) made this decision to support economic growth. India’s GDP is expected to grow at 6.4% in FY25, the slowest in four years, while inflation remains stable at 4.2% for FY26. Lower rates encourage borrowing, boost investments, and stimulate demand. By cutting interest rates, the RBI aims to balance growth and inflation, making credit more affordable and supporting economic recovery.