RBI Cuts Repo Rate Amidst Inflation Target Alignment

Reserve Bank Governor Sanjay Malhotra and the MPC reduced the repo rate by 25 basis points to 6.25%. This decision aligns with inflation moving towards the central bank's 4% target. The rate cut aims to pave the way for sustainable economic development and address growth concerns amidst global uncertainties.

In a decisive move, the Reserve Bank of India, led by Governor Sanjay Malhotra, announced a 25 basis points cut in the repo rate, bringing it down to 6.25%. This decision came as inflation showed signs of aligning with the central bank's 4% target, according to the MPC meeting minutes.

This is the first time in five years that such a reduction has been implemented, a move supported by all MPC members, including external advisors Nagesh Kumar, Saugata Bhattacharya, and Ram Singh. The rate cut arrives amidst global financial uncertainties and potential trade disruptions.

Despite the rate cut, the RBI has maintained a neutral monetary policy stance, allowing flexibility to adapt to evolving macroeconomic conditions. This reduction is seen as critical for stimulating growth, particularly as the government commits to fiscal consolidation and addressing FDI inflow challenges.

(With inputs from agencies.)