RBI Lowers Repo Rate To 6%, Second Consecutive Cut To Spur Demand

The Reserve Bank of India (RBI) on Wednesday lowered the key lending rate, or repo rate, by 25 basis points, bringing it down to 6%.

The announcement came following the conclusion of the central bank's Monetary Policy Committee (MPC) meeting, led by Governor Sanjay Malhotra, which spanned three days beginning 7 April.

"After a comprehensive evaluation of the evolving macroeconomic and financial conditions and outlook, the MPC unanimously voted to reduce the policy repo rate by 25 basis points to 6% with immediate effect," stated Sanjay Malhotra.

This marks the second consecutive rate cut, following a similar reduction in February. It also represents Governor Malhotra's second major public address since assuming the role in December 2024.

The rate reduction comes at a time when inflation has fallen below 4%, amid increasing concerns about a slowdown in economic growth. The central bank's move aims to stimulate demand and encourage investment.

Accordingly, the Standing Deposit Facility (SDF) rate under the Liquidity Adjustment Facility has been revised to 5.75%, while the Marginal Standing Facility (MSF) rate now stands at 6.25%.

In addition, the RBI has shifted its monetary policy stance from 'neutral' to 'accommodative'.

"It was also resolved to shift the stance from neutral to accommodative. The bank recognises that the rapidly evolving situation necessitates ongoing monitoring and reassessment of the economic outlook," said the RBI Governor.