RBI Cuts Repo Rate by 25 bps; Loan EMIs May Drop, GDP Forecast Trimmed to 6.5%

RBI Cuts Repo Rate to 6% Amid Global Uncertainty; Loan and Deposit Rates Likely to Fall

In a significant monetary policy shift, the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, bringing it down to 6% following the April 9 policy review. This decision, made by the RBI’s six-member Monetary Policy Committee (MPC), is expected to ease interest rates on home, personal, and vehicle loans, along with deposit rates, in the coming days.

Alongside the rate cut, the MPC also altered the monetary policy stance from "neutral" to "accommodative", indicating a willingness to consider further rate reductions to support economic growth.

The central bank also revised India’s GDP growth projection for 2025-26, lowering it from 6.7% to 6.5%. Retail inflation, on the other hand, is expected to remain steady at 4% during the same period.

The rate cut comes in the backdrop of rising global economic uncertainty, triggered by the recent escalation in trade tensions following U.S. President Donald Trump’s imposition of reciprocal tariffs. These developments have raised concerns about inflationary pressures and a potential slowdown in global trade.

“FY26 has begun on a note of caution. The international economic outlook is rapidly evolving, and some anticipated trade frictions are now materializing,” said RBI Governor Sanjay Malhotra, justifying the need for a supportive monetary environment.

With this move, the RBI aims to cushion the domestic economy against external shocks while providing room for growth amidst a turbulent global landscape.