The Monetary Policy Committee (MPC) reduced the repo rate, the rate at which the RBI lends to commercial banks by 25 basis points. The benchmark rate now stands at 5.25 percent, marking a cumulative reduction of 125 basis points through 2025. RBI governor Sanjay Malhotra announced that the panel will continue with its "neutral" monetary policy stance The GDP growth rate for the 2nd quarter stood strong at 8.2 percent with lower inflation compared to previous quarter.
The GDP growth rate forecast was estimated at 7.3 percent while inflation forecast stood at 2 percent. Rural consumption rate has also increased steadily supported by GST cuts.
All these factors seems to have contributed to the RBI's decision to ease monetary lending. This rate cut will benefit borrowers as the repo rate cut will transmit into lower interest rates