On February 7, 2025, the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points, bringing it down from 6.50% to 6.25%. This decision by the Monetary Policy Committee (MPC) aims to stimulate economic growth by lowering borrowing costs for banks, which could lead to cheaper loans for consumers and businesses.
The rate cut is expected to encourage spending and investment, providing support to sectors like housing, education, and automotive loans. The RBI also reduced the Marginal Standing Facility (MSF) rate to 6.50% to ensure adequate liquidity in the banking system.
This move follows the RBI’s ongoing efforts to maintain economic stability while managing inflation, marking the first repo rate cut since May 2020.
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