RBI slashes repo rate by 25 bps to 6% as Trump tariffs kick in; EMIs to get cheaper
Mumbai, 09-04-2025: In a move aimed at bolstering the economy amid mounting global uncertainties and trade tensions, the Reserve Bank of India on Wednesday announced a reduction in the key policy interest rate by 25 basis points, bringing the repo rate down to 6 per cent. This marks the second consecutive rate cut by the central bank following the February reduction that had brought the rate to 6.25 per cent. RBI Governor Sanjay Malhotra, addressing the media after the 54th meeting of the Monetary Policy Committee (MPC), confirmed that all six members of the committee unanimously voted in favour of the rate cut.
The monetary stance has also been shifted to ‘accommodative,’ indicating the committee will now consider either maintaining the current rates or implementing further cuts in future meetings. This stance reflects the central bank’s intention to support growth while maintaining price stability.
The decision comes at a time when the Indian economy is grappling with headwinds, including the impact of the newly imposed reciprocal tariffs by the United States. Effective April 9, the US has levied a 26 per cent tariff on Indian imports, a move that has added to the broader trade uncertainties affecting economic outlooks worldwide.
As a consequence of these developments, the RBI has revised India’s GDP growth forecast for FY26 to 6.5 per cent, down from the earlier projection of 6.7 per cent. At the same time, inflation for the upcoming fiscal has been projected at 4 per cent, marginally lower than the previous estimate of 4.2 per cent.
Among other key announcements, the RBI has permitted the National Payments Corporation of India (NPCI) to raise the UPI transaction limit for person-to-merchant payments, a move expected to enhance digital transactions across the country. Additionally, the central bank has proposed a review of the existing guidelines for lending against gold jewellery and intends to expand the framework for co-lending arrangements.
The RBI reiterated that the Indian economy has made steady progress toward achieving the twin objectives of price stability and sustained economic growth, though global trade disruptions have created new layers of uncertainty. The minutes of the 54th MPC meeting will be published on April 23, and the next policy meeting is scheduled to be held from June 4 to 6, 2025.
