RBI Poised for Rate Cut Amid Economic Stimulus Moves

The Reserve Bank of India (RBI) is expected to reduce the key interest rate by 25 basis points soon. This anticipated move complements the Union Budget's initiatives to boost consumption-driven demand. Despite lingering concerns over the rupee's depreciation, the RBI aims to stimulate growth.

In a significant policy shift, the Reserve Bank of India (RBI) is set to lower the key interest rate by 25 basis points after a prolonged period of stability spanning two years. This move aligns with the Union Budget's strategies to invigorate consumption-led demand amid a challenging economic landscape.

Economic experts underscore the favorable inflation trends, which have been consistently below the RBI's 6% threshold, as a catalyst for potentially boosting growth by addressing sluggish consumption metrics. Since February 2023, the central bank maintained the repo rate at a steadfast 6.5%, marking the first rate reduction since the economic fallout of the Covid pandemic.

Spearheading this monetary policy shift is newly appointed RBI Governor Sanjay Malhotra, who presides over his inaugural Monetary Policy Committee meeting this Wednesday. The eagerly awaited decision, expected on Friday, could herald a pivotal change in India's interest rate policy influenced by recent liquidity infusions and strategic fiscal moves outlined in the Union Budget.

(With inputs from agencies.)