The decision by RBI on Friday to reduce its key rate for the first time in five years comes less than a week after the government unveiled historic tax cuts in Budget 2025

The Reserve Bank of India reduced the repo rate by 25 basis points, lowering it to 6.25%, under the leadership of new Governor Sanjay Malhotra. The decision was influenced by a resilient Indian economy amidst global uncertainties and marked the first reduction since May 2020.

The six-member Monetary Policy Committee (MPC) meeting that began on Wednesday, announce the decision to reduce the repo rates by 25 basis points to 6.25 percent.