RBI Monetary Policy: Massive Relief For Loan Borrowers; RBI Slashes Interest Rates After Nearly 5 Years

New Delhi: Bringing massive relief to home and auto loan borrowers, the Reserve Bank of India (RBI) announced reduction in interest rate after a gap of nearly five years.

This is new RBI Governor Sanjay Malhotra’s first Monetary Policy after he took charge at the central bank, succeeding Shaktikanta Das.

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.

Governor Malhotra said that Inflation targeting has served Indian economy very well, adding that, average inflation has remained lower since introduction of monetary policy framework.

"Economic interest also warrants efficiency in economy, we recognise this. We will continue to strengthen, rationalise and refine the prudential framework. It will be our endeavour to do stakeholder consultations and give importance to such consultations," he added.

RBI had last reduced the repo rate by 40 basis points to 4 per cent in May 2020, following the outbreak of the Covid pandemic and subsequent lockdown.

Two years later, in May 2022 RBI started a rate hike cycle in view of the Russia-Ukraine war only to hit pause button on interest rates in May 2023.