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RBI Cuts Repo Rate by 25 Basis Points to 6.25%

  • 07 Feb 2025

On 7th February 2025, the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points (bps) to 6.25%, marking the first rate cut in nearly five years.

  • The decision was taken unanimously by the six-member Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra.

Key Points

  • Standing Deposit Facility (SDF): Reduced to 6%.
  • Monetary Stance: The neutral stance continues, balancing inflation and growth.
  • Inflation Outlook: CPI inflation projected at 4.8% for FY25, expected to ease to 4.2% in FY26.
  • Growth Projection: Real GDP growth for FY25 estimated at 6.4%, expected to improve to 6.7% in FY26.
  • Global Impact: Rupee under pressure amid a strong US dollar, rising bond yields, and capital outflows.
  • Liquidity Management: RBI committed to providing adequate liquidity to the system.
  • Foreign Reserves: India’s forex reserves stand at $630+ billion (covering over 10 months of imports).