RBI's Interest Rate Cut: A Boost for Indian Economy

The Reserve Bank of India (RBI) slashed interest rates by 50 basis points and cut the cash reserve ratio by 100 basis points, injecting Rs 2.5 lakh crore liquidity to boost borrowing and stimulate the economy. This move aims to lower loan costs, push growth, and address inflation concerns.

In a move that surprised many, the Reserve Bank of India (RBI) cut interest rates by a significant 50 basis points, lowering the benchmark repo rate to 5.5% in an effort to reduce borrowing costs and stimulate the economy.

The RBI also slashed the cash reserve ratio by 100 basis points to 3%, adding a substantial Rs 2.5 lakh crore to the banking system. This decision is expected to lower lending rates across home, auto, and personal loans, provided lenders transfer these savings to borrowers.

RBI Governor Sanjay Malhotra believes this monetary easing is crucial for propelling economic growth amidst a challenging global environment, signaling a shift in monetary policy from 'accommodative' to 'neutral', and leaving room for future rate adjustments dependent on economic data.

(With inputs from agencies.)