RBI's 0.25% repo rate cut to boost market sentiment, increase liquidity, and demand: CAIT

The Reserve Bank of India (RBI) connected Friday lowered the repo complaint by 25 ground points to 6.25 per cent, marking the archetypal complaint chopped successful 5 years. The move, aimed astatine boosting economical activity, was welcomed by Confederation of All India Traders (CAIT) National Secretary General Praveen Khandelwal, who termed it a growth-oriented measurement that volition easiness borrowing costs for businesses and consumers.

The RBI’s six-member Monetary Policy Committee (MPC) unanimously decided to trim the cardinal lending complaint portion maintaining a “neutral” stance to clasp flexibility successful responding to macroeconomic developments. The repo rate, which antecedently stood astatine 6.5 per cent, is the complaint astatine which the RBI lends to commercialized banks.

Khandelwal said that the ostentation complaint is projected to beryllium 4.8 per cent for FY25 and 4.2 per cent for FY26, ensuring a equilibrium betwixt maturation and terms stability. He highlighted that little EMIs connected location and concern loans would supply fiscal relief, summation disposable income, and boost user spending, yet improving marketplace liquidity and encouraging concern investments.

He further stated that an expected summation successful the income taxation exemption bounds to Rs 12 lakh successful the upcoming fund would heighten nationalist savings, further driving user spending and strengthening economical growth.

'Monetary argumentation successful sync with fiscal consolidation'

Speaking astatine MPC meeting, RBI Governor Sanjay Malhotra said ostentation had moderated and was expected to align further with the cardinal bank’s target. He assured that RBI was committed to ensuring capable liquidity successful the system and would instrumentality measures to support durable liquidity to conscionable systemic requirements.

Malhotra besides stressed that RBI was monitoring the rupee intimately and taking steps to support currency stability. He projected that India’s economical maturation momentum would prime up, with agrarian request already showing signs of revival. However, helium cautioned that uncertainties successful planetary commercialized and clime alteration posed risks to economical growth.

The repo complaint chopped follows the Centre’s caller idiosyncratic income taxation simplification to stimulate consumption. The argumentation announcement besides comes up of Budget 2025-26, wherever the concern curate has reaffirmed the government’s fiscal consolidation path, lowering the fiscal shortage people to 4.4 per cent of GDP from 4.8 per cent earlier.

This simplification successful the fiscal shortage has decreased the government’s marketplace borrowing needs, providing much abstraction for the RBI to follow a softer monetary argumentation to spur economical growth.