RBI Policy Update: 25 Bps Rate Cut After 5 Years

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RBI Monetary policy: Monetary Policy Committee has reduced the repo rate by 25 BPS for the first time in about five years, and maintained a neutral approach. Governor Sanjay Malhotra said inflation remains within the target levels, although the concerns for economic growth are still 4 per cent inflation.

RBI Monetary Policy: February 2025 Updated

RBI cuts repo rate with 25 bps after about 5 years

According to the market’s expectations, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) has decided to cut repo rate by 25 basic point (BPS) for the first time in about five years. The monetary attitude remains “neutral”.

Great policy announcement from RBI Governor

RBI Governor Sanjay Malhotra announced a policy decision, mentioned that inflation now corresponds to the target. MPC unanimously helped to cut prices while maintaining a neutral attitude.

First class cut since May 2020

After keeping the reference goal unchanged at 6.5% for eleven meetings in a row, the India’s central bank rate cut the rate during the February 2025 meeting. This decision comes in the midst of increasing concern for signs of inflation with 4% goals to slow economic growth.

Last time RBI reduced the repo rate in May 2020, when it reduced the frequency at 40 base points to 4%.

RBI Policy: 5 Store Takeaays

1. RBI starts speed cut

In the midst of global economic uncertainties, RBI’s monetary policy committee unanimously decided to cut reference prose by 25 BPS, which reduced it by 6.5%. This step meets the market’s expectations, especially after budget 2025, as many except measures to slow down economic growth.

2. Holding neutral financial attitude

Despite the interest rate cuts, RBI has maintained a “neutral” attitude, showing that future decisions will depend on how the economy and inflation behave over the coming months.

3. Inflation is consistent with RBI -Measure

Governor Malhotra emphasized that inflation is now within the RBI goal limit, which has played an important role in the decision to reduce interest rates. However, inflation is close to 4% a matter of concern.

4. Focus on supporting economic development

Rate deduction reflects RBI’s attention when supporting economic growth, which shows signs of losing speed. The central bank aims to create favorable conditions for promoting investments and consumption.

5. Cut before 2020

This is the first time RBI has reduced the repo since May 2020. Then the frequency was cut from 40 BPS to 4% to support the economy during the Kovid -19 epidemic. The current deduction indicates the active approach to RBI to handle financial challenges.