RBI Cuts Repo Rate to 6.25% Amid Slowing Inflation

On February 7, 2025, the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 6.25%, marking the first cut since May 2020, maintaining a Neutral stance. This move aims to stimulate economic growth as inflation shows signs of easing. The central bank also lowered the cash reserve ratio (CRR) by 50 basis points to 4%, releasing approximately ₹1.16 lakh crore into the banking system to alleviate liquidity constraints. Additionally, small finance banks are now permitted to offer pre-sanctioned credit lines via the Unified Payments Interface (UPI), enhancing financial inclusion. The RBI projects FY25 inflation at 4.8%, with growth expected to slow to 6.4% due to weaker manufacturing and subdued corporate investments. 

Source: Reuters