The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points. This means that the rate has come down from 6.25 percent to 6.00 percent. The decision was taken during the latest monetary policy meeting in April 2025. This is the second time this year when RBI has reduced the rate. The purpose of this step is to promote the economy.
RBI also adjusted its policy stance from neutral. This means that it is ready to take more steps in future if necessary to support development. All members of the monetary policy committee agreed to this decision.
At the same time, RBI has also reduced its development forecast for the Indian economy. It is now expected that GDP will increase by 6.5 percent in the financial year 2025-26 to increase instead of the earlier 6.7 percent. Inflation is also expected to be around 4 percent, which is slightly lower than earlier estimates.
What does it mean for common people and businesses
A low repo rate means that banks can borrow money from RBI at a cheap rate. This makes it possible for banks to provide loans to customers at low interest rates. This will help people save more money every month.
Businesses will also benefit from cutting this rate. They can now take loans at low interest rates to increase their operations or start new projects. It is particularly helpful for people in small businesses and real estate. Cheap loan can help developers start new housing projects and promote construction work.
This step is aimed at increasing expenditure and investment in the country. When people and business spend more, it helps the economy grow. The RBI is trying to ensure that the economy remains strong even when global conditions are uncertain.
