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India's central bank cuts repo rate to 6.25 pct for 1st time in nearly 5 years

Source: Xinhua | 2025-02-07 | Editor:Jennifer

India's central bank, the Reserve Bank of India (RBI), on Friday announced a reduction in repo rate by 25 basis points to 6.25 percent.

The repo rate is the rate at which the central bank lends money to commercial banks in the event of a shortfall of funds.

The move has been undertaken to boost the economy.

RBI Monetary Policy Committee last reduced the repo rate in May 2020 and kept it unchanged in the last 11 policy meetings.

"After assessing the current and evolving macroeconomic situation, the MPC unanimously decided to reduce the policy repo rate under the liquidity adjustment facility by 25 basis points to 6.25 percent with immediate effect," reads a statement issued by the RBI.

"Consequently, the standing deposit facility rate shall stand adjusted to 6.00 percent and the marginal standing facility rate and the Bank Rate to 6.50 percent. The MPC also decided to continue with the neutral monetary policy stance and remain unambiguously focussed on a durable alignment of inflation with the target, while supporting growth."

According to the RBI, these decisions are in consonance with the objective of achieving the medium-term target for consumer price index inflation of 4 percent within a band of plus and minus 2 percent, while supporting growth. 

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