The Reserve Bank of India (RBI) has announced
a significant shift in its monetary policy, introducing measures aimed at
balancing economic growth with inflation control. The key highlights of this
policy shift are as follows:
- Repo
Rate Reduction: The RBI has lowered the repo rate
by 50 basis points to 5.50 percent, making borrowing more
affordable for individuals and businesses. This marks the third
consecutive rate cut this year, totaling 100 basis points since
February 2025.
- CRR
Cut: A 100 basis points reduction in the Cash
Reserve Ratio (CRR) will inject ₹2.5 lakh crore into the
banking system, improving liquidity and easing credit conditions.
- Inflation
Forecast: The RBI has revised its Consumer
Price Index (CPI) inflation forecast downward to 3.7 percent,
reflecting stable price levels and easing inflationary concerns.
- GDP
Growth Projection: The central bank maintains
its 6.5 percent growth estimate, signaling confidence in India's
economic recovery despite global uncertainties.
- Policy
Stance Change: The RBI has shifted its stance
from accommodative to neutral, indicating a more balanced approach
where future rate changes will depend on economic data.
Impact on Borrowers and Businesses
- Lower
Loan EMIs: Home loans, auto loans, and
personal loans will become cheaper, benefiting borrowers.
- Boost
in Credit Growth: Banks will have more liquidity,
encouraging lending to businesses and startups.
- Stock
Market Reaction: Investors may see positive
momentum in equity markets due to improved liquidity conditions.
- Savings
& Deposits: Fixed deposit rates may decline,
impacting returns for savers.
Why This Policy Shift Matters
The RBI’s decision reflects softening inflation
trends and the need to stimulate demand amid global economic
uncertainties. With three consecutive rate cuts, the central bank is
focusing on reviving growth while ensuring inflation remains within the
target range.
