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"RBI Cuts Repo Rate to 6.25% After 5 Years: Cheaper Loans & Market Boost Ahead!"
The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, bringing it down to 6.25%. This marks the first rate cut in nearly five years and aims to stimulate economic growth amid a slowdown. The decision was made unanimously by the Monetary Policy Committee (MPC) and reflects a shift towards a more accommodative monetary policy stance
2/7/20251 min read
RBI Governor Sanjay Malhotra noted that while growth is expected to recover, it remains lower than the previous year, and current inflation dynamics have provided room for easing rates. In response to the rate cut, sectors sensitive to interest rates experienced gains. Financials rose by 0.2%, auto stocks increased by 1%, and real estate stocks surged by 1.5%. Metals sectors also gained 2.4% due to higher global metal prices.
The RBI has revised its annual growth projection to 6.4% for the fiscal year ending in March, with a forecasted growth of 6.7% for the next year. Retail inflation, while still above the RBI's target, has been declining and is expected to continue easing. This rate cut is anticipated to lower borrowing costs for consumers and businesses, potentially boosting sectors like housing and automotive by making loans more affordable and improving liquidity conditions.
✔ RBI has cut the repo rate by 0.25%, bringing it down to 6.25%.
✔ Reason: To boost economic growth amid a slowdown.
✔ Impact on Economy:Loans may become cheaper (home loans, car loans, business loans).Stock market gains: Banking, auto, and real estate stocks are rising.
✔ Inflation & Growth:Inflation is reducing, giving RBI space to cut rates.GDP growth forecast: 6.4% this year, 6.7% next year.This move is expected to increase borrowing, spending, and overall economic activity.