RBI Cuts Repo Rate by 25 Basis Points to 6% in First Monetary Policy Review of FY 2025-26

Ganpat Singh Chouhan

New Delhi, April 9 In a significant move that may bring relief to borrowers, the Reserve Bank of India (RBI) on Wednesday announced a 0.25% cut in the repo rate, bringing it down from 6.25% to 6.00%. The decision was announced by RBI Governor Sanjay Malhotra following the conclusion of the three-day Monetary Policy Committee (MPC) meeting, the first of the financial year 2025-26.

Loan EMIs May Fall as Interest Rates Ease

The repo rate cut is likely to result in reduced interest rates on home loans, car loans, and personal loans, potentially easing EMIs for borrowers. The policy rate cut is expected to help stimulate borrowing, enhance liquidity, and boost consumer spending.

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Governor Malhotra stated, “The MPC unanimously voted to reduce the repo rate by 25 basis points to 6%. India’s economy is on the right trajectory, and signs of recovery remain consistent. However, global uncertainties, especially due to U.S. trade tariffs, require a cautious monetary approach.”

The RBI has also revised its GDP growth forecast for FY 2025-26, lowering it from 6.7% to 6.5% in light of the evolving global economic environment.

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What Is the Repo Rate?

The repo rate is the interest rate at which the RBI lends money to commercial banks. A reduction in this rate lowers the cost of funds for banks, allowing them to offer loans at more affordable rates to consumers and businesses. This helps to stimulate economic activity by boosting credit demand and investment.

Structure of the MPC and Its Role

The six-member Monetary Policy Committee is tasked with maintaining price stability and supporting economic growth. It includes three RBI officials and three members appointed by the central government. The current members are:

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Sanjay Malhotra, RBI Governor
Dr. Rajiv Ranjan, Executive Director, RBI
M. Rajeshwar Rao, Deputy Governor, RBI
Dr. Nagesh Kumar, Director, Institute for Studies in Industrial Development
Saugata Bhattacharya, Economist
Prof. Ram Singh, Director, Delhi School of Economics

The MPC typically meets every two months, with six scheduled reviews in each financial year.

Economic Context and Previous Actions

This is the second consecutive rate cut by the RBI. In February 2025, the central bank had reduced the repo rate from 6.50% to 6.25%, marking its first rate revision in over two and a half years. The current move further strengthens RBI’s intent to support economic recovery amid global trade and inflation pressures.

Author Profile

Ganpat Singh Chouhan: My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.