In a widely anticipated move, the Reserve Bank of India (RBI) has reduced its policy repo rate by 25 basis points to 5.25%, signaling a shift toward a more growth-oriented monetary stance. The decision comes amid moderate inflation, steady credit growth, and the government’s ongoing push to sustain momentum in key sectors like manufacturing, housing, and infrastructure.
The central bank highlighted that global uncertainties and volatile commodity prices continue to pose risks, making liquidity management a top priority. By lowering borrowing costs, the RBI aims to encourage both consumer and corporate spending while maintaining macroeconomic stability. Analysts believe the cut will support new business investments, particularly in small and medium enterprises, which are key drivers of India’s employment and exports.
Economists expect commercial banks to follow suit by reducing lending rates in the coming weeks, giving a boost to home loans, auto finance, and retail credit. The decision also reflects India’s confidence in maintaining stable growth, even as other major economies adopt cautious or restrictive monetary policies.