Central bank cuts rate again to fuel growth

THE Reserve Bank's rate-setting body on Wednesday shifted gears to support growth, having nearly achieved its objective of ensuring price stability.

- BEN KOCHUVEEDAN @Mumbai

Acknowledging that the fast-changing global environment following the raging tariff wars would drag FY26 growth down from 6.7% to 6.5%, the Monetary Policy Committee (MPC) of the RBI voted for growth.

Accordingly, the six-member panel unanimously reduced the repurchase or repo rate by 25 basis points (bps) to 6% with immediate effect and changed the policy stance to accommodative from neutral, indicating that the days of easy money are back again.

"An accommodative policy stance means there are two options before us — to cut rate again or retain status quo," RBI Governor Sanjay Malhotra told reporters.

With the second successive cut, the RBI has lowered the repo rate by 50 bps since February. In the previous easing cycle, it had delivered a cumulative 250 bps cut, taking the rate down to a historic low of 4%.

In the February policy review, the MPC, for the first time in nearly five years, reduced the repo rate by 25 bps.