New Delhi: The Reserve Bank of India (RBI) on Wednesday reduced the policy repo rate by 25 basis points to six per cent. The decision was taken in the wake of tariffs imposed by US President Donald Trump. The move will lower the borrowing costs for banks. Due to this, it will the banks to lend money to individual customers at lower rates. EMI for loans are likely to be reduced.
The decision was announced after RBI's Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, concluded its three-day meeting on Wednesday. The meeting began on Monday, April 7.
"After a detailed assessment of the evolving of the macroeconomic and financial conditions, and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 6 per cent with immediate effect," the RBI governor said.
RBI Governor Sanjay Malhotra's Announcements:
Neutral To Accommodative Stance:
The MPC also decided to change its stance from neutral to accommodative. "It also noted that the rapidly evolving situation requires continuous monitoring and assessment of the economic outlook," Malhotra said.
Investment activity has gained traction, and is expected to improve further on the back of sustained capacity utilisation, the RBI Governor stated.
RBI Lowers GDP Growth Projection:
Notably, RBI lowers the GDP growth projection for FY26 to 6.5 per cent from an earlier estimate of 6.7 per cent.
Inflation Dropped Below 4%:
The central bank lowered FY26 inflation projection to 4 per cent from 4.2 per cent projected earlier. As per the RBI Governor, the central bank expanded the scope of co-lending beyond priority sector loans.
RBI Proposes To Allow NPCI To Revise UPI Transaction Limit:
The central bank has proposed to the National Payments Corporation of India (NPCI) to revise the UPI transaction limit for person to merchant as per the needs of the economy. "We are aiming for non-inflationary growth built on foundation of improved demand and sustained macroeconomic balance," Malhotra said.
Last week, Trump had announced a hefty 26 per cent reciprocal tariffs on Indian imports. These tariffs have come into effect from today.
