The Reserve Bank of India has made a landmark decision in its monetary policy meeting by reducing the repo rate by 25 basis points. The repo rate, previously at 5.50%, has now decreased to 5.25%. RBI Governor Sanjay Malhotra stated that the cut would be effective immediately. This move by the RBI will lead to a reduction in your home loan EMIs and enable banks to offer loans at lower rates.
Highlighting the challenges of the past month, RBI Governor Sanjay Malhotra remarked on the positive outlook for the upcoming months, predicting steady GDP growth and manageable inflation. The inflation rate is anticipated to be around 2% for the entire year, while real GDP growth in the second quarter was recorded at 8.2%. For the first half of this fiscal year, GDP growth is projected at 8%.
The MPC members unanimously agreed on the 25 basis points repo rate cut. The CRR has been maintained at 3%, with the SDF rate at 5.25%, the MSF rate at 5.75%, and the bank rate at 5.75%. RBI has announced a chain of liquidity supportive measures, including 1 lakh crore INR OMO buying and a 3-year USD/INR swap worth 5 billion dollars, set for December.
Continued Repo Rate CutsThe Reserve Bank of India has consistently reduced the repo rate four times in 2025. February saw a 25 basis point cut to the repo rate by RBI, followed by another 25 basis points reduction in April, and June marked the largest cut of the year at 50 basis points. Now, yet another 25 basis point reduction has taken place. In total, the repo rate has been reduced by 125 basis points or 1.25% this year.
Prior to this year’s rate cuts, the repo rate had remained unchanged twice. However, what started at 6.50% has now dropped to 5.25%.
Impressive Surge in Stock Market
With the repo rate cut, the stock market has witnessed an impressive surge. The Sensex has climbed over 200 points, trading above 85,500, while the Nifty has gained 75 points, trading at 26,110. The Nifty Bank index has also soared by 364 points.
