ECONOMY
RBI slashes Repo Rate by 25 basis points to 6%, loans set to get cheaper
- IBJ Bureau
- Apr 10, 2025
The Reserve Bank of India (RBI) on Wednesday reduced the key lending rate, or the Repo Rate, by 25 basis points, bringing it down to 6 per cent. The decision was announced after the central bank’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, concluded its three-day meeting that had begun on April 7.
“After a detailed assessment of the evolving macroeconomic and financial conditions and outlook, the MPC voted unanimously to reduce the policy Repo Rate by 25 basis points to 6 per cent with immediate effect,” said Mr Malhotra.
This is the second rate cut in a row, following a 25-basis point reduction in February. It is also the second major address by Mr Malhotra since he took charge as RBI governor in December 2024.
The move comes at a time when inflation has dropped below 4 per cent and there are growing concerns over slower economic growth. The central bank has taken this step to support demand and give a boost to investment.
The Standing Deposit Facility (SDF) rate under the Liquidity Adjustment Facility was adjusted to 5.75 per cent, and the Marginal Standing Facility rate (MSF rate) was adjusted to 6.25 per cent.
The Repo Rate, which is the rate at which the RBI lends funds to commercial banks, plays a crucial role in determining the overall cost of borrowing in the economy. A reduction in this rate typically lowers the cost of funds for banks, enabling them to pass on the benefit to consumers through reduced lending rates.
The RBI has also changed its earlier stance from neutral to accommodative.
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