Mumbai: In a landmark decision to stimulate economic growth, the Reserve Bank of India (RBI) has cut its key repo rate for the first time in nearly five years. The RBI’s Monetary Policy Committee (MPC) unanimously voted to reduce the key rate by 25 basis points, bringing it down from 6.5% to 6.25%. This announcement was made by RBI Governor Sanjay Malhotra in his first major address since taking over the position in December.
The MPC, comprising three RBI members and three external experts, had last reduced the repo rate in May 2020 and has since maintained a status quo across 11 consecutive policy meetings. The latest rate cut marks a significant shift in policy aimed at reinforcing economic resilience amid global uncertainties.
Economic Outlook: Global and Domestic Perspectives
Governor Malhotra highlighted the challenges posed by a sluggish global economy, which continues to grow below historical averages. Despite these headwinds, he reassured that “high-frequency indicators suggest resilience in the global economy.”
On the domestic front, India’s economy has shown strength, but external factors such as inflationary pressures and fluctuations in the dollar have necessitated policy adjustments. With receding expectations on the pace of rate cuts in the United States, global bond yields and the dollar have surged, influencing RBI’s decision-making.
Growth and Inflation Projections
The RBI has revised its real GDP growth estimate for the financial year ending in March to 6.4%. For the upcoming fiscal year, the projected growth rates are as follows:
- Q1: 6.7%
- Q2: 7.0%
- Q3: 6.5%
- Q4: 6.5%
Meanwhile, retail inflation for the current financial year is expected to average 4.8%, with a slight moderation to 4.4% in the final quarter. While core inflation is anticipated to remain moderate, food inflation is projected to soften, offering relief to consumers.
Ensuring Liquidity and Financial Stability
The RBI Governor reassured that banks have sufficient liquidity buffers and that the central bank remains committed to ensuring an orderly financial system. “We will take proactive measures to maintain liquidity stability,” Malhotra emphasized, highlighting that the return on assets and equity remains robust for the banking sector.
Digital Fraud and Cybersecurity Concerns
Apart from economic measures, Malhotra raised concerns over the rising incidence of digital fraud, calling for stringent action from all stakeholders. He urged banks to enhance their fraud detection mechanisms and bolster cybersecurity frameworks to safeguard customers from financial crimes.
The Road Ahead
The latest interest rate cut signals a policy shift toward growth-oriented measures while maintaining a cautious eye on inflation. As India navigates global economic uncertainties, the RBI’s proactive stance is expected to bolster confidence in financial markets and drive investment. The coming months will be crucial in determining the impact of this decision on consumer spending, business expansion, and overall economic momentum.
The Media Times – Unfiltered. Unbiased. Unstoppable.
Founded in 2012, The Media Times stands as a pillar of fearless journalism, committed to delivering raw, unfiltered, and unbiased news. In a world saturated with noise, we cut through the clutter, bringing facts to the forefront without agenda or compromise.From hard-hitting investigative reports to thought-provoking analysis, we cover politics, healthcare, business, technology, entertainment and global affairs with an unwavering commitment to truth. Our team of dedicated journalists and experts works relentlessly to challenge narratives, expose realities, and hold power accountable.At The Media Times, we don’t just report the news—we shape conversations, spark change, and empower the public with knowledge.
Truth is our weapon, integrity is our shield, and journalism is our battlefield.📢 Because the world deserves the truth. No filters. No bias. Just facts.