In line with market expectations, the Reserve Bank of India's Monetary Policy Committee (MPC) cut the key repo rate by 0.25 per cent to 6.25 per cent. This is the first rate cut in nearly 5 years and signals a shift in the central bank's policy to aid economic growth. Before this move, the RBI had kept the repo rate steady at 6.5 per cent for 11 straight meetings. RBI also raised India's GDP growth projection to 6.7 per cent from the previous estimate of 6.6 per cent.
<h2>RBI maintains a neutral policy stance</h2>
RBI's newly elected governor, Sanjay Malhotra, expressed optimism in the country's growth outlook, citing moderating inflation as a key factor. RBI also revised its inflation forecast for the next fiscal year to 4.2 per cent. According to Malhotra, rural consumption continues to improve, but urban consumption remains subdued. He emphasised that government policy support remains crucial for sustaining economic momentum. He also hailed the recent tax cuts announced in the budget as a major boost to household consumption.
<h2>Markets react with caution</h2>
Indian markets saw a muted response despite the rate cut. Investors also reacted to the moderate growth outlook for the next fiscal year. Analysts cite concerns over global economic uncertainty and domestic consumption trends as major factors that continue to weigh on sentiment.&nbsp;
Adhil Shetty, CEO of Bankbazaar.com reacted to the rate cut and said, 'The repo rate cut after 2 years is hugely welcome, and we congratulate Governor Malhotra on beginning his term with a bang. With the tax rate cuts earlier this month, the salaried and the middle class have received a double boost to tackle inflation and boost household savings.&nbsp;
He further explained, 'If you have a 20-year home loan at a rate of 8.75 per cent and had paid 12 EMIs by March, with a rate cut of 25 bps kicking in from April, your interest savings will improve by ₹8417 per lakh. For example, on a loan of ₹50 lakh, you&rsquo;ll save ₹4.20 lakh at this rate, with 10 EMIs being shaved off the loan tenure, all other parameters remaining constant.'
BankBazaar recommends that, 'borrowers with good credit scores seek more aggressive payment options like refinancing to a rate lower by 50 bps or more. If they keep the EMI constant with a lower rate &mdash; let&rsquo;s say 8.25 per cent &mdash; they will secure per-lakh savings of ₹14,480 over the remaining tenor. These savings of nearly 15 per cent per lakh are substantial. Assuming the rate kicks in from April 1 after 12 EMIs of this loan have been paid, we get per-lakh interest savings of ₹3002 from the rest of the year. On a loan of ₹50 lakh, this implies savings of ₹1.50 lakh for the second year of the loan. Now, if we see these savings in the backdrop of additional savings from income tax slab hikes, a salaried individual can have substantial gains for FY25-25. For instance, A salaried person with a gross income of ₹25 lakh and a home loan of ₹50 lakh (20 years, 9%, 12 EMIs paid by March 2025) can hope to save a total of ₹1.37 lakh in FY2025-26 or ₹11,461 per month. This will be through a combination of interest savings on the home loan rate reduction of 25 BPS and the tax savings from higher tax slabs from April 1.'

Business & Economy, Before this move, the RBI had kept the repo rate steady at 6.5 per cent for 11 straight meetings. RBI also raised India's GDP growth projection.

In line with market expectations, the Reserve Bank of India's Monetary Policy Committee (MPC) cut the key repo rate by 0.25 per cent to 6.25 per cent. This is the first rate cut in nearly 5 years and signals a shift in the central bank's policy to aid economic growth. Before this move, the RBI had kept the repo rate steady at 6.5 per cent for 11 straight meetings. RBI also raised India's GDP growth projection to 6.7 per cent from the previous estimate of 6.6 per cent. RBI maintains a neutral policy stance RBI's newly elected governor, Sanjay Malhotra, expressed optimism in the country's growth outlook, citing moderating inflation as a key factor. RBI also revised its inflation forecast for the next fiscal year to 4.2 per cent. According to Malhotra, rural consumption continues to improve, but urban consumption remains subdued. He emphasised that government policy support remains crucial for sustaining economic momentum. He also hailed the recent tax cuts announced in the budget as a major boost to household consumption. Markets react with caution Indian markets saw a muted response despite the rate cut. Investors also reacted to the moderate growth outlook for the next fiscal year. Analysts cite concerns over global economic uncertainty and domestic consumption trends as major factors that continue to weigh on sentiment. Adhil Shetty, CEO of Bankbazaar.com reacted to the rate cut and said, 'The repo rate cut after 2 years is hugely welcome, and we congratulate Governor Malhotra on beginning his term with a bang. With the tax rate cuts earlier this month, the salaried and the middle class have received a double boost to tackle inflation and boost household savings. He further explained, 'If you have a 20-year home loan at a rate of 8.75 per cent and had paid 12 EMIs by March, with a rate cut of 25 bps kicking in from April, your interest savings will improve by ₹8417 per lakh. For example, on a loan of ₹50 lakh, you’ll save ₹4.20 lakh at this rate, with 10 EMIs being shaved off the loan tenure, all other parameters remaining constant.' BankBazaar recommends that, 'borrowers with good credit scores seek more aggressive payment options like refinancing to a rate lower by 50 bps or more. If they keep the EMI constant with a lower rate — let’s say 8.25 per cent — they will secure per-lakh savings of ₹14,480 over the remaining tenor. These savings of nearly 15 per cent per lakh are substantial. Assuming the rate kicks in from April 1 after 12 EMIs of this loan have been paid, we get per-lakh interest savings of ₹3002 from the rest of the year. On a loan of ₹50 lakh, this implies savings of ₹1.50 lakh for the second year of the loan. Now, if we see these savings in the backdrop of additional savings from income tax slab hikes, a salaried individual can have substantial gains for FY25-25. For instance, A salaried person with a gross income of ₹25 lakh and a home loan of ₹50 lakh (20 years, 9%, 12 EMIs paid by March 2025) can hope to save a total of ₹1.37 lakh in FY2025-26 or ₹11,461 per month. This will be through a combination of interest savings on the home loan rate reduction of 25 BPS and the tax savings from higher tax slabs from April 1.'

RBI cuts repo rate to 6.25%, first cut in 5 years

The Reserve Bank of India cut its main policy rate on Wednesday by a quarter percentage point to a more than 6-1/2 year low, saying a slump in inflation opened room for monetary easing&nbsp;while pinning further action on upcoming economic data.

The rate cut is the RBI&#39;s first easing move since one of the same size in October and the first by a central bank in Asia since December - a show of confidence in a country that has experienced a surge in foreign investments into debt and shares this year.

Cutting the repo rate by 25 basis points to 6.00 per cent -- the lowest since November 2010 -- had been widely anticipated as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 per cent.

The RBI said easing prices had provided &quot;some space&quot; for monetary policy accommodation: inflation is now well below the RBI&#39;s 4 per cent target and its projection of 2.0-3.5 per cent in April-September.

The rate cut will likely ease some of the pressure from the government and markets for action to lift the economy, which had annual growth in January-March of 6.1 per cent - fast by global standards but India&#39;s lowest number in over two years.

Also read:&nbsp;<a href="http://www.wionews.com/business-economy/rbi-lilely-to-cut-mail-policy-rates-today-18486">RBI may cut interest rates today</a>

But the RBI also retained its &quot;neutral&quot; stance, and warned inflation could accelerate&nbsp;while pinning future action on data -- a view that leaves open the question of whether it will cut rates further, as sought by the government.

&quot;The MPC (monetary policy committee) remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis,&quot; the RBI said in a statement.

The most liquid 10-year bonds initially fell after the decision, but then rebounded to trade flat for the day, with the yield at 6.45 per cent, up 1 bps from its Tuesday close.

The rupee also gave up earlier gains to trade at around 63.80 per dollar, close to its levels before the RBI statement. The broader NSE share index was down 0.3 per cent.

The RBI stuck to its inflation projections, including that price increases could accelerate to 3.5 per cent to 4.5 per cent in October-December.

The central bank attributed its prediction on factors such as planned pay hikes for government employees, a recovery in food prices, and the impact on prices from the launch of a national goods and services tax on July 1.

Economists were widely split about whether the RBI would cut rates again. Its next policy meeting is Oct&nbsp;3-4.

&quot;Economic growth has come down substantially, and from that perspective, further stimulus is required for the economy in terms of reduction in the interest rate,&quot; said Anita Gandhi, a director at brokerage Arihant Capital in Mumbai.

&quot;If RBI gets confirmation that inflation will remain in the lower territory, there is a possibility of a further rate cut.&quot;

Four members of the committee voted to cut rates by 25 bps, while one voted for a 50 bps cut and one voted to leave rates unchanged.

The RBI also cut the reverse repo rate by 25 bps to 5.75 per cent.

The rate cut is the RBI's first easing move since one of the same size in October and the first by a central bank in Asia since December

The Reserve Bank of India cut its main policy rate on Wednesday by a quarter percentage point to a more than 6-1/2 year low, saying a slump in inflation opened room for monetary easing while pinning further action on upcoming economic data. The rate cut is the RBI's first easing move since one of the same size in October and the first by a central bank in Asia since December - a show of confidence in a country that has experienced a surge in foreign investments into debt and shares this year. Cutting the repo rate by 25 basis points to 6.00 per cent -- the lowest since November 2010 -- had been widely anticipated as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 per cent. The RBI said easing prices had provided "some space" for monetary policy accommodation: inflation is now well below the RBI's 4 per cent target and its projection of 2.0-3.5 per cent in April-September. The rate cut will likely ease some of the pressure from the government and markets for action to lift the economy, which had annual growth in January-March of 6.1 per cent - fast by global standards but India's lowest number in over two years. Also read: RBI may cut interest rates today But the RBI also retained its "neutral" stance, and warned inflation could accelerate while pinning future action on data -- a view that leaves open the question of whether it will cut rates further, as sought by the government. "The MPC (monetary policy committee) remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis," the RBI said in a statement. The most liquid 10-year bonds initially fell after the decision, but then rebounded to trade flat for the day, with the yield at 6.45 per cent, up 1 bps from its Tuesday close. The rupee also gave up earlier gains to trade at around 63.80 per dollar, close to its levels before the RBI statement. The broader NSE share index was down 0.3 per cent. The RBI stuck to its inflation projections, including that price increases could accelerate to 3.5 per cent to 4.5 per cent in October-December. The central bank attributed its prediction on factors such as planned pay hikes for government employees, a recovery in food prices, and the impact on prices from the launch of a national goods and services tax on July 1. Economists were widely split about whether the RBI would cut rates again. Its next policy meeting is Oct 3-4. "Economic growth has come down substantially, and from that perspective, further stimulus is required for the economy in terms of reduction in the interest rate," said Anita Gandhi, a director at brokerage Arihant Capital in Mumbai. "If RBI gets confirmation that inflation will remain in the lower territory, there is a possibility of a further rate cut." Four members of the committee voted to cut rates by 25 bps, while one voted for a 50 bps cut and one voted to leave rates unchanged. The RBI also cut the reverse repo rate by 25 bps to 5.75 per cent.

RBI cuts repo rate by 25 bps to 6 per cent

rbi-repo-rate-reserve-bank-of-india

Rbi Repo Rate. Reserve Bank Of India, News on Rbi Repo Rate. Reserve Bank Of India, stories on Rbi Repo Rate. Reserve Bank Of India, articles on Rbi Repo Rate. Reserve Bank Of India, Rbi Repo Rate. Reserve Bank Of India stories at Wion, Rbi Repo Rate. Reserve Bank Of India news, Rbi Repo Rate. Reserve Bank Of India latest news

rbi repo-rate-reserve-bank-of-india

RBI cuts repo rate to 6.25%, first cut in 5 years

RBI cuts repo rate by 25 bps to 6 per cent