RBI Cuts Rates, Signals Shift to Less Restrictive Policy

The Reserve Bank of India (RBI) cut its key repo rate by 25 basis points to 6.25% today, marking the first rate reduction in nearly five years. In his debut policy meeting, new RBI Governor Sanjay Malhotra signaled a shift towards a less restrictive monetary stance, citing moderating inflation and the need to support economic growth. The Monetary Policy Committee (MPC) voted unanimously for the rate cut while maintaining a "neutral" policy stance. Malhotra emphasized that the flexible inflation targeting framework has served India well, projecting inflation at 4.2% for FY26. The move is expected to boost credit growth and stimulate the economy.