The Reserve Bank of India (RBI) has announced a major change in its monetary policy, reducing the repo rate by 0.25 percent. This decision, made by the Monetary Policy Committee (MPC), lowers the repo rate from 6.25 percent to 6 percent. RBI Governor Sanjay Malhotra announced this development after a three-day meeting held on April 7, 8, and 9.
This marks the second consecutive reduction in the repo rate in recent months, following a previous cut on February 7, when the rate was reduced from 6.5 percent to 6.25 percent. The MPC's unanimous decision aims to support economic growth amid increasing global uncertainties, including fluctuating trade tariffs and a weakening US dollar.
Expected to ease the financial burden on loan holders
The reduction in the repo rate is expected to ease the financial burden on loan holders, potentially leading to lower interest rates on housing and automobile loans. This could stimulate demand in these sectors and encourage more investments in real estate.
Despite a challenging financial year where growth rates fell below expectations, RBI Governor Malhotra noted signs of improvement in domestic growth following the slowdown in the first half of the fiscal year 2024-25. However, he acknowledged that growth remains below desired levels.
Prakash Kumar Pandey
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