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, under new Governor Sanjay Malhotra, has reduced the repo rate by 25 basis points, signaling a shift in focus towards stimulating economic growth. This marks the first rate cut since May 2020 and aims to align inflation with the target while supporting growth.

The repo rate cut by 25 basis points by the monetary policy committee (MPC) of RBI announced Friday will give a long-awaited relief on interest rates and also be supportive of economic growth, according to experts.