The Reserve Bank of India (RBI) on Wednesday cut the repo rate by 25 basis points, reducing it from 6.25 per cent to 6 per cent, in a bid to support the economy amid growing global headwinds stemming from sweeping tariffs and retaliatory duties imposed by US President Donald Trump on several countries, including India.
Announcing the decision after the MPC’s three-day meeting held on April 7, 8, and 9, RBI Governor Sanjay Malhotra stated, “After a detailed assessment of the evolving macroeconomic and financial conditions and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 6 percent with immediate effect.”
This marks the second consecutive rate cut in recent months. On February 7, the central bank had reduced the repo rate from 6.5 percent to 6.25 percent.
Governor Malhotra highlighted the global economic turbulence that influenced the committee’s decision. “To deliberate and decide on the policy reparations, the global economic outlook is fast changing. The recent trade tariff-related measures have exacerbated uncertainties, clouding the economic outlook across regions and posing new headwinds for global growth and inflation. Amidst this turbulence, the US dollar has weakened appreciably,” he stated.
Malhotra also emphasized that domestic growth is showing signs of recovery after a sluggish first half of the last financial year (2024-25) but remains below desired levels. “Growth is improving after a weak performance in the first half of the last financial year (2024-2025), although it still remains lower than what we aspire for,” he said.
He added, “Consequently, the Standing Deposit Facility (SDF) rate, under the Liquidity Adjustment Facility, shall stand adjusted to 5.75 percent, and the Marginal Standing Facility (MSF) rate, or the Bank Rate, shall stand adjusted to 6.25 percent.”
The MPC also adjusted key rates under the Liquidity Adjustment Facility (LAF). The Standing Deposit Facility (SDF) rate now stands at 5.75 percent, while the Marginal Standing Facility (MSF) rate and the Bank Rate have been revised to 6.25 percent.
On inflation, the Governor painted an optimistic picture and said, “The Monetary Policy Committee noted that inflation is currently below the target. It is supported by a sharp fall in food inflation. Moreover, there is a decisive improvement in the inflation outlook. As per projections, there is now greater confidence in a durable alignment of headline inflation with a target of 4 percent over a 12-month horizon.”
(ANI)
