In a move that was widely expected, the Reserve Bank of India (RBI) lowered the repo rate by 25 basis points, lowering it to 6%. The decision was announced at 10 AM following the first Monetary Policy Committee (MPC) meeting of the financial year 2025-26. RBI Governor Sanjay Malhotra confirmed the move in his address, stating, "The MPC voted unanimously to reduce the policy repo rate by 25 basis points to 6% with immediate effect."
Shift in stance to 'Accommodative'
Along with the rate cut, the RBI has changed its policy stance from 'neutral' to 'accommodative', indicating a clearer focus on supporting economic growth. This adjustment is expected to reduce lending rates across the board, especially for home loans. The Marginal Standing Facility rate now stands at 6.25%, supporting the broader effort to make credit more accessible.
According to industry experts, the move "could lead to increased investment in real estate and a boost in housing demand." The cut is expected to make borrowing more attractive for both individuals and businesses, particularly in interest-sensitive sectors like housing.
The timing aligns well with inflation expectations of 4.5%, as the decision may uplift consumer sentiment and improve affordability—especially in mid-income and affordable housing segments.
Global developments and RBI's forward outlook
RBI Governor Malhotra also addressed the broader global context, referencing recent tariff announcements by US President Donald Trump that have unsettled global markets, weakened the dollar, and reduced crude oil prices.
Despite these developments, Malhotra assured that India remains on a stable path in terms of growth and inflation management. Looking ahead, he said the MPC is currently weighing only two options: status quo or further rate cuts, suggesting a continued focus on stimulating the domestic economy.
Summing up
The RBI's unanimous decision to cut the repo rate to 6% reflects an accommodative stance aimed at fuelling growth and improving borrowing affordability. With inflation in check and global uncertainty looming, the move is poised to benefit sectors like housing while reinforcing economic momentum.
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