RBI Cuts Interest Rate for First Time in Five Years to Boost Economy

The Reserve Bank of India has reduced its key interest rate by 25 basis points for the first time in five years, aiming to stimulate the economy amid easing inflation. This policy shift, led by Governor Sanjay Malhotra, comes as the RBI sees growth potential and manages inflation dynamics.

In a significant move to stimulate the slowing economy, the Reserve Bank of India (RBI) has slashed its benchmark interest rate by 25 basis points, marking the first rate cut in nearly five years. The decision aligns with predictions from over 70% of economists in a Reuters poll.

The Monetary Policy Committee, with unanimous agreement, decided to maintain its neutral stance, highlighting Governor Sanjay Malhotra's emphasis on managing growth and inflation dynamics. Despite growth expectations to reach 6.7%, it's still below the desired target of 7% or more.

The committee, under Malhotra's guidance since December, flagged volatile global energy prices as a possible risk to India’s inflation outlook. Indian government officials have attributed part of the economic slowdown to stringent banking regulations, suggesting a potential shift in policy.

(With inputs from agencies.)