GUWAHATI: The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, bringing it down to 6%. The decision was announced on Wednesday, April 9, and was taken unanimously by the Monetary Policy Committee (MPC).
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The new rate has been introduced to reduce borrowing costs for banks, enabling them to offer loans at lower interest rates to consumers. It also marks the second rate cut by the central bank in the current calendar year, as in February, the repo rate was lowered to 6.25%.
The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks. A cut in this rate usually prompts banks to lower their own lending rates, thereby reducing equated monthly instalments (EMIs) on loans for consumers, including those on home and auto loans.
Relatedly, RBI Governor Sanjay Malhotra stated that while the domestic economy remains broadly stable, the financial year has begun on an anxious note globally. He pointed to inflation risks arising from recent global developments, including higher tariffs imposed by the United States on Indian exports.
Malhotra also noted that ongoing trade frictions could negatively affect global growth and subsequently impact India’s export performance. However, he assured that India is actively engaging with the US on trade-related issues and that domestic economic management remains on track.
