RBI's Surprising Rate Cut: A Catalyst for Economic Growth

The Confederation of Indian Industry and the Federation of Indian Chambers of Commerce & Industry applaud the Reserve Bank of India's decision to lower the repo rate by 25 basis points, highlighting its potential to boost various economic sectors. Industry leaders emphasize the benefits for housing, auto, and lending sectors, foreseeing stronger growth prospects.

The Confederation of Indian Industry (CII) has expressed strong approval of the Reserve Bank of India's (RBI) decision to reduce the repo rate by 25 basis points to 6.25 percent. This marks the first rate cut in nearly five years, signaling a shift in monetary policy.

Chandrajit Banerjee, Director General of CII, noted that recent liquidity easing measures would facilitate effective transmission of the rate cut to productive economic sectors. He also highlighted the RBI's commitment to inject necessary liquidity as a key factor in maintaining effective monetary policy transmission.

The decision comes as a relief to key sectors, with the Federation of Indian Chambers of Commerce & Industry (FICCI) also commending the move. FICCI President Harsha Vardhan Agarwal described it as timely and forward-looking, anticipating that banks will lower lending rates following the cue.

Industry stakeholders anticipate significant benefits, especially for the housing and auto sectors. Anshuman Magazine from CBRE highlighted the positive impact on the housing market, particularly for first-time homebuyers, while CS Vigneshwar from FADA pointed out the benefits for the auto sector, expecting a boost in demand due to more affordable auto loans.

The broader economic outlook appears promising with these measures, including the financial provisions outlined in the Union Budget 2025-26, which align with the rate cut to support growth in manufacturing, MSMEs, and infrastructure.

(With inputs from agencies.)