The Reserve Bank of India (RBI) has announced its first monetary policy of Fiscal Year (FY) 2025-26 today, April 9. The RBI has reduced the benchmark repo rate by 25 basis points (bps) to 6.00% from 6.25%. This decision was taken unanimously by the monetary policy committee (MPC).
This is the second consecutive rate cut, with the last reduction done in February, this year. Moreover, the marginal standing facility rate stands at 6.25% as of now.
Between May 2020 and February 2025, the central bank has raised interest rates seven times, reaching 6.50%. Until February 2025, RBI had kept the benchmark rates unchanged since February 2023.
RBI Governor Malhotra unveiled the decision in the monetary policy statement on Wednesday. During his address, Malhotra pointed out towards the global uncertainties following the reciprocal tariffs announcement by US President Donald Trump.
RBI MPC: How The Repo Rate Cut Impacts Common People?
The repo rate cut leads to more money supply into the economy, improves cash flow, stimulates borrowing, and increase the consumer spending. Furthermore, RBI’s decision may allow industries and individuals to get loans at cheaper interest rates, and cheaper loans can translate into cheaper commodities. However, it demands on how quickly banks will implement repo rate changes on loans. These decisions ultimately impact consumers.
For Example:
- If an individual has taken a home loan at an interest rate of 8.5%. With the 25 BPS rate cut, his/her interest rate can drop to 8.25%.
- If an individual has taken a personal loan at an interest rate of 12%. With the 25 BPS rate cut, his/her interest rate can drop to 11.75%.
- A car loan at an interest rate of 9.5% could down to 9.25% interest rate.
What Else?
This meeting of the Monetary Policy Committee (MPC) was headed by the RBI Governor, Sanjay Malhotra. It was scheduled from April 7 to 9 and the credit policy decision are announced today, April 9. Notably, this was the second MPC meet under the leadership of Malhotra and also the second one after the Union Budget 2025-2026. Furthermore, MPC changed its policy stance to “accommodative”.
ALSO READ: RBI Reduces Repo Rate By 25 Basis Points To 6% – Second Consecutive Cut In Two Months
