On Friday, the Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) reduced the repo rate, the rate at which the RBI lends to commercial banks by 25 basis points, bringing it down to 6.25%.
This marks the first rate cut by the RBI in five years, following a two-year period of holding the rate steady. The last rate cut was made in May 2020.
The repo rate, till now, stood at 6.5 per cent.
The interest rate cut comes within a week of Finance Minister Nirmala Sitharaman in Budget 2025-26 providing the biggest-ever tax break to the middle class to boost consumption after the economy has slowed to its lowest pace since the pandemic.