Daijiworld Media Network- Mumbai

Mumbai, Apr 10: Borrowers can expect some relief as the Reserve Bank of India (RBI) on Wednesday cut the repo rate by 25 basis points to 6 per cent—the second such cut this year—in an effort to support economic growth amid global uncertainties and trade tensions.

The decision, taken unanimously by the six-member Monetary Policy Committee (MPC), brings the key lending rate to its lowest since November 2022. In February, the RBI had made a similar cut—the first since May 2020.

With this move, loans linked to external benchmark lending rates (EBLR), including home, auto, and personal loans, are set to become cheaper—provided banks pass on the rate cut benefits. A 25-bps reduction could translate into lower EMIs for borrowers.

The RBI also changed its policy stance from “neutral” to “accommodative”, signalling the possibility of further rate cuts in the near future.

Governor Sanjay Malhotra, while announcing the MPC’s decision, said the rate cut was timely as the economy faces rising pressure from global trade disruptions, especially the 26 per cent additional tariffs imposed by the US on Indian exports that came into effect today.

“These tariff-related measures have deepened the uncertainty around global growth and inflation,” Malhotra noted, warning of new economic headwinds.

The central bank has also revised its GDP growth forecast for FY25-26 to 6.5%, down from the earlier projection of 6.7%, while trimming the inflation outlook to 4% from 4.2%.

The back-to-back rate cuts come as the RBI aims to strike a balance between boosting domestic growth and containing inflation, aided by recent cooling in oil prices and stable macroeconomic indicators.