RBI cuts repo rate by 50 bps

The Reserve Bank of India (RBI) unexpectedly reduced its key repo rate by 50 basis points (bps) and lowered the reserve ratio for banks by 100 bps in a move to boost liquidity. This decision comes as the Indian economy has slowed to a four-year low of 6.5 per cent for the fiscal year 2024-25, amid persistent global economic uncertainties. With this significant cut in policy rates and increased liquidity, the RBI is encouraging banks to lend more and at lower interest rates. However, the RBI has shifted its monetary policy stance from 'accommodative' to 'neutral,' indicating that it may have limited capacity for further easing. A cut in the repo rate also means that depositors will earn less interest on their bank fixed deposits.

- AGENCIES

Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points Friday, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy.