April 9, 2025 - Reserve Bank of India (RBI) today announced a cut in its key Repo Rate by 25 basis points (bps) to 6.00%, marking its second consecutive rate cut this year aimed at stimulating the economy. In February earlier this year, RBI had reduced the key rate to 6.25%.

RBI has also shifted its monetary policy stance from Neutral to Accommodative indicating potential for further rate reductions amid growing economic risks, including those stemming from US President Donald Trump's recent increase in US tariffs. ​

The cut in Repo Rate will reduce borrowing costs for banks and enable them to lend money to individuals at lower rates, reducing EMIs for loans. Interest rates on home, personal, vehicle loans and deposit rates are set to come down going forward.

RBI Governor Sanjay Malhotra said today that the six-member Monetary Policy Committee (MPC) had in its policy review voted unanimously to reduce the Repo Rate.

"The dent on global growth due to trade frictions will impede domestic growth. Higher tariffs may have an impact on net exports. India is very proactively engaging with the US administration on trade," Malhotra said. He added, “Global economic outlook is fast changing. FY26 has started on an anxious note and some global trade frictions are coming true.”

The Governor also said it was difficult to measure the impact of global developments on growth but emphasised that RBI was not worried about being able to manage domestic growth.

The Central Bank has revised its GDP growth projection in 2025-26 down to 6.5% from 6.7%, while reducing its inflation estimate to 4% from 4.2%.

The six-member MPC took the decision amid heightened uncertainty in the global market following the recent US tariff announcements. The rate cut has come in the wake of fears that higher tariff rates may lead to inflation, increase in global trade fears, US recession and a lower growth in the world economy.

Market reactions to the RBI rate cut today were modest, with slight declines in bond yields, the rupee, and equity indexes. No strong gains were seen. Shares of rate sensitive sectors were trading mixed after the MPC decision. Two hours into trade, while auto stocks gained up to 1%, real estate, banking and financial stocks fell up to 4%.