RBI Monetary Policy: After providing income tax relief to the middle class, they have now received the gift of cheaper loans. RBI Governor Sanjay Malhotra, while sharing the decisions taken during the three-day meeting of the Monetary Policy Committee (MPC), announced that the six-member committee has unanimously decided to reduce the repo rate by 0.25% to 6.25%.

Additionally, the MPC has decided to maintain a ‘neutral’ stance. This is the first time in nearly five years that the repo rate has been cut by 0.25%. The decision was taken unanimously. Notably, the repo rate had remained steady at 6.50% for the past two years.

The RBI last reduced the repo rate by 0.40% to 4% in May 2020 during the COVID-19 pandemic. Later, to tackle the risks arising from the Russia-Ukraine war, the RBI began increasing rates in May 2022, and this trend continued until it stopped in February 2023.

Interest Rate Decision to be Announced Today

The three-day review meeting of the Monetary Policy Committee (MPC) began on Wednesday. On the final day of the meeting, i.e., today (Friday), the decision on interest rates will be announced. This is the first bi-monthly review meeting under the leadership of the new RBI Governor. Malhotra was appointed as the new RBI Governor in December after Shaktikanta Das completed his six-year tenure.

Experts’ Predictions

Radhika Rao, Senior Economist at DBS Group Research, stated that they expect the MPC to vote in favor of a 0.25% cut in the repo rate, bringing it down to 6.25%. Global research firm Bank of America Global Research also indicated that both economic growth and inflation data point towards the need for easing monetary conditions.

It is widely anticipated that the decision to cut interest rates by 0.25% will be unanimous. Industry body ASSOCHAM also expressed strong expectations of a rate cut, bringing the policy rate down to 6.25%. An SBI Research report suggests that a 0.25% reduction in interest rates is expected in the monetary review.