Rbi mpc meet: The Reserve Bank of India (RBI) on Friday announced to reduce the policy rate repo rate from 0.25 percent to 6.25 percent. After about five years, the central bank has decided to cut interest rates. Earlier in May, 2020, the repo rate was reduced by 0.40 percent to four percent at the time of Kovid-19 epidemic. Then the RBI started increasing the rates in May 2022 to deal with the risks of Russia-Ukraine War and the series stopped in February 2023. The repo rate remains stable at 6.50 percent for two years. This meeting is very important amidst the rising economic growth and fluctuations in stock markets. In December 2024, Sanjay Malhotra took over as Governor after Shaktikanta Das ended his term. This is the first meeting of the MPC in which he has joined as a governor.
GDP’s growth rate is estimated to be 6.7 percent
RBI new Governor Sanjay Malhotra said that the Indian economy is strong but is not untouched by global challenges. The central bank has estimated the economic growth rate to be 6.7 percent for the next financial year, while it has upheld the estimate of its stay at 6.4 percent in the current financial year. At the same time, retail inflation is estimated to be 4.2 percent in the next financial year while it is expected to be 4.8 percent in the current financial year. With this, MPC has decided to maintain its stance ‘neutral’.
What is Repo Rate
The repo rate is the interest rate on which commercial banks take loans from the central bank to meet their immediate needs. RBI uses this rate to keep inflation under control. Repo rate cuts mean that the monthly installment (EMI) on various loans including houses, vehicles is believed to be cut.