RBI cuts key policy repo rate by 25 bps to 6.25% and maintains a neutral stance, after noting moderating inflation

RBI Cuts Key Policy Repo Rate by 25 bps to 6.25% Amid Moderating Inflation

In a significant move, the Reserve Bank of India (RBI) has reduced the key policy repo rate by 25 basis points (bps), bringing it down to 6.25%. This adjustment marks the first rate cut by the central bank in nearly five years, as highlighted by various news reports from sources such as BusinessLine, The Economic Times, and Gulf Times.

The decision emerged from the RBI’s Monetary Policy Meeting in 2025, which also projected the country’s GDP to grow at a rate of 6.7%. The rate cut comes against the backdrop of moderating inflation, a factor that seems to have influenced the central bank’s decision. Despite this monetary easing, the RBI has maintained a ‘neutral’ policy stance, indicating a balanced approach towards future monetary policy adjustments.

According to reports from Business Standard and Elets BFSI, the cut in the repo rate aligns with the economic conditions where inflation risks are seen to be receding. This move is anticipated to provide a boost to economic growth by reducing borrowing costs, thereby encouraging investments and spending.

The context provided by The Economic Times suggests that this cut aims to stimulate the economy, reflecting the RBI’s responsiveness to the current economic environment. The central bank’s neutral stance suggests it is keeping its options open for future monetary interventions, likely dependent on evolving economic indicators.

This rate cut signals a crucial point in India’s monetary policy, as it seeks to balance the economic growth trajectory while keeping an eye on inflation trends. The decision underscores the RBI’s strategy to support growth without sacrificing its commitment to maintaining price stability.