RBI Repo Rate Cut: Balancing a weakening rupee against strong growth and softening inflation, the RBI’s Monetary Policy Committee on Friday cut the key policy rate, repo rate, by 25 basis points, paving the way for banks to lower interest rates on loans – especially home, personal and small business loans — and deposits. Buoyed by the economy’s robust performance, the panel also raised the FY2026 GDP growth forecast by 50 basis points to 7.3 per cent and trimmed the consumer price index (CPI) inflation projection to 2 per cent from 2.6 per cent. The rate-setting committee, which met in Mumbai on Friday, retained its neutral policy stance.

What prompted the MPC’s decision?

The six-member MPC decided to reduce the repo rate – the key policy rate – to 5.25 per cent even as the rupee fell t

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