Good News for Borrowers as RBI Cuts Repo Rate to 6% in Second Cut This Year

Mumbai, April 9, 2025: The Reserve Bank of India’s Monetary Policy Committee’s (MPC) on Wednesday cut the repo rate by 25 basis points (bps) to 6 per cent. The decision, taken at the meeting of the six-member MPC, paves the way for reduction in interest rates on home loans as well as vehicle loans and bank deposits. The policy stance of the central bank has now turned from neutral to accommodative, pointing to more repo rate cuts down the line.

The RBI also revised its GDP growth projection to 6.5 per cent in the current financial, down from the 6.7 per cent it had said earlier. On retail inflation, the MPC was of the view that is would be 4 per cent in FY 2025-26.

The RBI decision comes amid tumult in world markets catalysed by reciprocal tariffs imposed by US President Donald J. Trump. The impact of the upped tariffs is expected to show up in inflation, trade friction and a reduced global growth. “Global economic outlook is fast changing. FY26 has started on an anxious note and some global trade frictions are coming true,” RBI Governor Sanjay Malhotra is reported to have said.

This is the second consecutive cut in the repo rate – the rate at which the central bank lends money to banks – by the RBI. It was in February that the repo rate was cut by 25 bps to 6.25 per cent, a first in five years. With this successive 25 bps cut, borrowers are expected to get relief of like magnitude from banks on home and other loans.