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RBI's Repo Rate
Outlook Money
|May 2025
The Reserve Bank of India (RBI) reduced the repurchase agreement rate, popularly known as repo rate, by 25 basis points (bps) on April 9, 2025.
Under RBI Governor Sanjay Malhotra, the monetary policy committee (MPC) agreed on reducing the repo rate to 6 per cent from 6.25 per cent previously, saying it had observed a 'decisive improvement' in inflation expectations. Incidentally, this is the second rate cut since February 2025. RBI slashed the repo rate by 25 bps in its February 2025 bi-monthly MPC meeting after a gap of two years. Earlier, in May 2020, RBI had slashed the repo rate to an all-time low of 4 per cent in response to the unprecedented economic challenges posed by the Covid-19 pandemic.
WHAT IS REPO RATE?
The repo rate is the interest rate at which RBI lends money to banks. When banks face a shortage of funds, they borrow money from RBI at the repo rate for their short-term needs.
This story is from the May 2025 edition of Outlook Money.
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