Repo Rate Cut: The Reserve Bank of India (RBI) has announced a 0.25 percent cut in the repo rate on Friday. The Monetary Policy Committee (MPC) chaired by Governor Sanjay Malhotra reduced the repo rate by 25 basis points to 5.25%.
With this decision, the possibility of reducing the EMI of home loan, personal loan and other loans has increased, which will reduce the financial burden on the common people. The reduction in repo rate will also have a positive impact on the economy, because cheap loans will increase demand and boost economic activities.
RBI has maintained its policy stance ‘neutral’. Governor Sanjay Malhotra said that demand in rural areas continues to improve, while urban demand also remains strong. He also said that private investment remains bullish due to increase in demand for non-food items, bank loans and high capacity utilization.
GDP growth estimate increased
The Reserve Bank of India has revised India’s gross domestic product (GDP) forecast for fiscal year 2025-26 to 7.3%, compared to 6.8% earlier. The growth estimate for Q3FY26 has been raised to 7.0% from 6.4%. The forecast for the fourth quarter was also raised to 6.5% from 6.2%. Q1FY27 growth is estimated at 6.7% from 6.4% and Q2FY27 at 6.8%.
How many times will the repo rate be reduced in the year 2025?
RBI has cut the repo rate four times so far in the year 2025. In February the interest rate was reduced from 6.5% to 6.25%. The MPC has reduced interest rates by 1.25% a total of three times this year, with a 0.25% cut in April, a 0.50% cut in June and now a 0.25% cut in December. This cut has been made after almost five years, which is part of an effort to remove the economic slowdown and promote investment and demand.
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