The Reserve Bank of India (RBI) cut the repo rate by 25 basis points to 6% to boost economic growth and reduce loan interest burdens.
This is the second consecutive rate cut by the Monetary Policy Committee (MPC), which also shifted its stance to "accommodative", meaning more cuts may follow.
The cut helps loan borrowers (like home and auto loan customers) but reduces interest earnings for savers.
The move comes amid global trade tensions, especially due to U.S. tariffs, which are affecting global and Indian growth.
The GDP growth forecast for 2025-26 has been lowered from 6.7% to 6.5%, citing trade war impacts and investment uncertainty.
Inflation risks exist on both sides: rising tariffs may push it up (via imported goods), but slow global growth may bring it down (via lower oil and commodity prices).
RBI believes inflation is not a major concern for now, but global volatility makes future outcomes uncertain.
Along with the repo rate, other rates were adjusted:
Standing Deposit Facility (SDF): now 5.75%
Marginal Standing Facility (MSF) and Bank Rate: now 6.25%
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