RBI's Repo Rate

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.

- Kundan Kishore

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.