In a significant move aimed at reviving economic momentum, the Reserve Bank of India (RBI) has announced a 25 basis point cut in the repo rate, bringing it down from 6.25% to 6%. This is the second rate cut by the central bank in 2025, signaling a clear shift toward an accommodative monetary policy stance.
The decision was taken during the first bi-monthly monetary policy meeting of the financial year 2025–26, chaired by RBI Governor Shaktikanta Das. The Monetary Policy Committee (MPC) voted 5:1 in favor of the rate cut, citing persistent inflation moderation and the need to support economic recovery.
“The inflation trajectory is expected to remain within the RBI’s comfort zone, creating space for policy action,” said Governor Das during a press briefing. “This rate cut is expected to ease borrowing costs for both businesses and consumers, thereby stimulating demand.”
The repo rate — the rate at which the RBI lends money to commercial banks — plays a critical role in determining interest rates across the banking system. A reduction in this rate is likely to make home, car, and personal loans cheaper, benefiting borrowers and boosting consumption.
Analysts see the move as a preemptive step to counter a slowdown in private investment and to spur growth amid global uncertainties and geopolitical tensions.
With this cut, banks are expected to gradually pass on the benefit to customers through lower lending rates, potentially reducing EMIs and making credit more affordable across sectors.
The central bank also retained its GDP growth forecast for FY26 at 6.9% and inflation projection at 4.5%, reinforcing confidence in India’s macroeconomic fundamentals.
Economists are now closely watching how commercial banks respond and whether this policy shift will effectively translate into increased credit off-take and consumer spending in the coming months.
RBI Cuts Repo Rate to 6% to Boost Economic Growth
