RBI Cuts Key Lending Rate By 25 Basis Points To Spur Growth Amid Global Uncertainty

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) on Wednesday (9 April) cut the repo rate by 25 basis points to 6 per cent from 6.25 per cent, ANI reported.

The decision, declared after the MPC's three-day meeting on 7, 8, and 9 April was unanimous.

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 per cent with immediate effect."

This marks the second straight reduction in the benchmark rate, following February’s 25 bps cut from 6.5 per cent to 6.25 per cent.

Citing turbulent global conditions as a key factor, Malhotra said, "The recent trade tariff-related measures have exacerbated uncertainties, clouding the economic outlook across regions, posing new headwinds for global growth and inflation. Amidst this turbulence, the US dollar has weakened appreciably."

On the domestic front, Malhotra noted signs of a rebound in growth, "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."

Key rates under the Liquidity Adjustment Facility (LAF) were also revised. "Consequently, the Standing Deposit Facility, the STF rate, under the Liquidity Adjustment Facility shall stand adjusted to 5.75 per cent, and the Marginal Standing Facility rate, or the MSF rate, and the Bank rate shall stand adjusted to 6.25 per cent," said Malhotra.

On inflation, the Governor said, "The Monetary Policy Committee noted that the 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. There is now a greater confidence of a durable alignment of headline inflation with a target of 4 per cent over a 12-month horizon." 

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